Sharing economies

Banking report says innovation the way to go

Open banking

In Summary

• Banks will need to partner with third-party data specialists to harness value of data

A general view shows people walking past the Central Bank of Kenya headquarters building along Haile Selassie avenue in Nairobi, on October 9, 2017
A general view shows people walking past the Central Bank of Kenya headquarters building along Haile Selassie avenue in Nairobi, on October 9, 2017
Image: REUTERS

Financial institutions  need to think beyond open banking to a shared marketplace to survive the changing banking environment., according to the World Fintech Report 2019.

The report by global consulting firm Capegemini, shows that open banking is evolving, with shifting focus towards customer experiences rather than products as more customers seek for choices when and how to interact with their banks.

“The need of the hour is a consent economy in which customers trust banks with their data and can revoke permissions easily, while banks can anticipate customer needs,” states the report.

It notes that the new banking environment needs a bank that can be the process owner or a participant in a process that their customer is going through, whether it is buying a home, or a car.

This will require banks to provide personalised choices at individual customer levels, higher transparency and seamless experiences and not just offering products.

In this new environment, banks should use the data they collect from customer to unlock new revenue, create value, and boost insightful decision making, which is personalized to each customer.

Going forward, banks will need to partner with third-party data specialists to harness value of data rather than building or buying their own services to avoid being overwhelmed by too much data.

And as the shared economy has worked successfully in the hospitality and ride hailing businesses, banks may also have to think in similar direction. This is by creating their own niches, or refining what they offer and can share with others in the banking ecosystem. This will increase their revenue sources where they use their strengths to lead in their market space.

The report further says that for the shared ecosystem to thrive, four pillars for the collaboration are needed. They include having the right people at the right place for proper governance and management expertise, finances, business and technology.