The past ten years have brought unprecedented disruption in the financial industry. Customer-first, digital transformation, the pandemic, and Open Banking: all these factors have accelerated change and have brought about new opportunities. The rise of new business models, the API economy, and interconnected ecosystems have paved the way to a new horizon, where embedded finance seems to be the next playing field, all powered by Open Banking infrastructure and principles.
Institutions that can translate Open Banking into opportunities will realize benefits sooner. A leader in the field who serves as Chief Strategy Officer of the startup Finconecta, Karina Gibson, is a key strategist who has delivered these transformational processes to her clients on several continents. She oversaw the team that designed and produced an open banking platform that enables Financial Institutions (FI’s) to tap into new business models, including banking as a service. Through this platform, even non-financial institutions can now launch financial services.
According to Gibson, “We see Open Banking gaining momentum around the world. New regulatory frameworks (UK, Canada, Hong Kong, Brazil), and mainly market-driven initiatives, together with the pandemic are contributing to the adoption of new business models and the acceleration of digitization processes in FI’s. Regardless of their size and target market, FI’s are today more than ever embracing Open Banking.”
Traditional banking models are being impacted. As Karina Gibson says “The biggest risk now lies in not adopting an open banking strategy beyond regulatory efforts. It’s not about complying, it’s about competing. Adopting APIS can enable a wider product offering and increase new revenue streams by monetizing assets and back-end processes.” Through APIS, banks can allow partner companies to provide payment processing, credit cards, loans, and other services, leading to more companies embedding financial services in their offerings.
Open Banking is revolutionizing the financial industry and beyond. Open Finance and open data are paving the road to the future. Financial institutions can now turn open banking from a compliance requirement into a competitive advantage.
This process has several challenges, first as a regulatory requirement and market initiative, and then how the business is made. Traditional banking models are being impacted and financial institutions have to effectively integrate collaboration with third parties of the financial ecosystem into their strategies.
To meet this challenge, financial institutions are doubling down and adopting a more open way of working, partnering with external providers, and capitalizing on new revenue streams, while reaching out to new customers. In today’s increasingly digital and fast-paced society, companies, now more than ever, face unique market forces that are reshaping the way business is currently done.
