With open banking pushing digital transformation in financial markets around the globe, financial institutions, in their efforts to maintain revenue streams, now face an important decision: which is the most appropriate open banking model for them moving forward? Here are the 4 most important ones for them to consider:
- Aggregator – by offering account aggregation services, financial institutions are able to monetize cross-offerings and data while simultaneously creating a frictionless experience for consumers.
- Distributor – financial institutions currently house massive amounts of consumer data. With open banking, they can leverage that data to offer more consumer-oriented, hyper-personalized bundled solutions that cater to consumers’ needs.
- Platform enabler – a platform-based approach allows financial institutions to open their infrastructure and APIs, which then gives them the opportunity to monetize data and API capabilities with FinTechs that are looking to collaborate, innovate and scale.
- Data provider – with this model, financial institutions take more of a “back office” role and risk losing direct consumer relationships. However, it allows them to play a more significant role in the backend by focusing solely on providing efficient, end-to-end banking solutions through business-to-business partnerships.
Before adopting any of these models, however, it is important that financial institutions consider the following four elements:
- Unified strategy – adopting an organization-wide unified data strategy that leverages artificial intelligence and other business intelligence tools enables truly personalized offerings for consumers.
- Collaborative mindset – fostering a collaborative mindset that permeates from the top down will serve to break functional silos.
- Open culture – cultivating an open culture that stimulates creativity and innovation ensures that innovations are more likely to be embraced throughout the organization.
- Diligent compliance – staying compliant with ever-evolving regulations requires an open attitude toward compliance.