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Open banking: 10 global trends you should know about

Unlocking the value of collaboration

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Open banking is a buzzword in financial services and it’s little wonder, given the rapid innovation underway and the value that this collaborative model can unlock for all parties involved.

Here are 10 top global trends driving open banking currently:

  1. Rapid innovation: Challenger organisations are typically able to innovate at a faster rate than larger rivals and should leverage this strength to maximise the opportunities presented by open banking, such as using improved customer data to offer tailored products for specific customer segments.
  2. Consumer protection: Companies are realising the value of the data they hold and investing heavily in safely leveraging its value to drive innovative customer solutions, build loyalty and enhance operations. Doing this without causing adverse effects on privacy requires implementation of adequate systems and processes to keep customers in charge of how, when, where and with whom their data is shared.
  3. Competition and choice: With financial institutions understanding that the key driver for open banking is the increased competitive pressures between banks, the race to be ahead of the pack has now become a critical consideration for all market players.
  4. Data security: The open access and use of banking data includes sensitive customer and associated information created as part of banking records. This information is highly confidential and requires organisations to place emphasis and priority on ensuring that sensitive information is kept in safe hands and held to the most rigorous data security standards.
  5. Digital identity: Open banking relies heavily on an integrated digital identity at its foundation. Consolidation of the holistic online profile for a person, organisation or electronic device will enable a secure and seamless authentication experience, and be a competitive lever between banks and other financial service providers.
  6. Access management: Banks will need the capability to securely and confidentially link a customer to their data. This requires a framework governing access (and revocation) rights, usage limitations and security where customers require either a standardised or customisable set of access management protocols defined for the sharing and use of data with third party service providers.
  7. Refocusing the customer relationship: Organisations can use open banking as an opportunity to reinforce/re-establish themselves at core of customer relationships. The potential loss of the critical mobile touch point may result in a more distant customer relationship as consumers begin to trust third parties with their finance and banking activities, thus relegating the bank to a utility role.
  8. Improved KYC: There is an opportunity to develop more robust and efficient KYC services, as organisations will now be able to improve customer profiles garnered as a result of more data being made available.
  9. Risk of disaggregation: Customers picking and choosing services from third-party providers may well disrupt the E2E value chain and respective cost and margin contribution models.
  10. Implementation cost and complexity: The introduction of an API service will prove expensive and complicated for most organisations as it will mean exposing complex internal payment and account systems data to external third parties in a standardised, secure and scalable means.

Examples of fintechs delivering open banking solutions

KPMG Matchi offers a platform of over 5,000 fintech solutions, categorised by focus sectors, fintech theme and geography, and has a track record of working with financial institutions, regulators and governments around the world. Here are a few solutions that have caught our attention:

Financial wellness: Outbank allows customers to choose their personal accounts from more than 4,000 banks and add shopping cards and online payment services to the app. With all their current accounts, credit cards, N26 and PayPal accounts in a single app, customers have full control over their finances from any place, at any time.
Customer experience: Kontomatik provides tools for the transformation of the financial industry into something more consumer-centric, beneficial and open for new companies, technologies, and products.
Customer acquisition: ZignSec allows financial institutions to pick the identity channels they want to use based on the country and the service to identify their online users. It makes multi-channel identity verification easy, helping online companies comply with KYC and AML regulation.
Risk management: Big Data Scoring is a cloud-based service that lets consumer lenders improve loan quality and acceptance rates through the use of big data.
New product development: TrueLayer offers an application to build financial applications, with a toolkit to build financial apps that connect to bank data, verify accounts, and access transactions in real time.

To find out more about open banking solutions or the KPMG Matchi portal, please get in touch.

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