In the new paradigm of financial services, banks need to do more than change – they need to create
By Manuel Jose Romero Rodriguez, Head of NTT DATA’s Open Banking Practice
Open banking is transforming the world of finance, by responding to a new paradigm in which financial services operate in an enhanced, digitalised ecosystem – reinventing the processes and practices of traditional banking models. This transformation is part of a broader shift to Open Business and an API economy, born out of regulatory requirements such as PSD2.
This shift is having a direct impact on incumbent banks, forcing them to digitally transform, whilst embracing new, innovative business models. This is a huge opportunity for banks to realise new revenue streams and deliver a truly customer-centric experience for the bank of the future.
As part of numerous projects on PSD2 and Open Banking in Europe, we have seen our clients follow a phased approach in which they focused initially on meeting the regulatory requirements and only then starting to reflect on how monetize that investment. Many started that journey with account aggregation, coupled with a new effort on categorization and insights based on the aggregated data of the client. Then many of them started to deliver initiation of payments from other bank accounts with the aim of providing an experience whereby the costumer does not have to leave the bank mobile app for checking or making transfers from other banks accounts. BBVA´s commercial “we welcome your other banks to the best mobile banking app in Europe” is a great example of this.
However, some forward-thinking banks have already started a new phase of re-positioning in this new banking ecosystem. Their new propositions leverage cloud technologies and APIs to bring to the market new solutions that generate new business models or new revenue streams for the bank. Going from Open Banking to Open Finance, aggregating and giving customers insights and solutions beyond banking is one line of activity that we are seeing right now. We are also seeing Banking-as-a-Service as a new business model capable of introducing the next wave of competitiveness in the industry. Any well recognized brand is in a position of launching a digital bank using the platform and the license of the bank with the right platform to do so.
Supporting our clients on the Open Banking journey
At NTT DATA, we are committed to helping our clients on this journey with a complete offering that spans from the design of a new digital proposition to leveraging our Open Banking Platform, Platea Banking. This is helping accelerate the launch of new propositions in the market in a fast and efficient manner. Sometimes as a greenfield project and sometimes using it as a modernization path, starting with a new digital product/service and then continuing that modernization in recurring cycles.
NTT DATA’s Open Banking Practice serves clients across the globe and this year we were positioned as a Leader in Everest Group’s Open Banking IT Services PEAK® Matrix Assessment 2020. Leaders are trusted partners in BFS enterprises’ digital transformation agendas, driving open API strategy through their depth of expertise in API management, core modernization initiatives, and global delivery capabilities. Unlike our competitors, our Open Banking Practice enables banks to execute on both sides of their digital transformation simultaneously – and become a “bank of the future”.