The pandemic unleashed unprecedented disruption, a level of global disorder not seen since the Second World War. To put it simply, without the internet, the global economy wouldn’t have survived the pandemic. During all of this, financial services have been at the forefront of a transformation of everything from payments to banking and commerce, as businesses have moved or deepened their online presence.

In our latest research report, The open banking revolution, we found the attitude of European financial executives mirroring this shift, as positive sentiment towards open banking increased from just over half (55 percent) in 2019, to 71 percent in 2021. Its impact at this point should not be understated – 82.8 percent of financial executives also believe that open banking is causing ‘a revolution in the industry.’

But there should be equal parts uncertainty and confidence at this time, as it still remains to be seen how the future will shake out. Many institutions are struggling to implement open banking initiatives at pace. While nearly a quarter (23 percent) believes their business will have completed its open banking objectives within the next five years, the most common view is that it could take up to a decade (39.9 percent) or even beyond (36.9 percent). Institutions that can translate open banking into concrete strategy will be in an optimum position to start realising its benefits sooner. So how can financial institutions best embrace the open banking revolution?

Improving the customer experience
There has never been a better time than the present for businesses to move their open banking strategy beyond compliance efforts. With a revolutionary opportunity at hand, the risk of doing the bare minimum may perhaps be bigger than the risk of experimenting, failing and trying again. Enhanced banking through external APIs can optimise existing product offerings and is the safest and most strategic direction a financial institution can take beyond compliance.

The risk of doing the bare minimum may perhaps be bigger than the risk of experimenting, failing and trying again

Third-party providers (TPPs) continue to play a crucial role in this area – many have developed specialist solutions for micro-segments along the customer journey, from customer acquisition to loyalty. They can therefore provide ample inspiration for banks looking to embrace open banking and strengthen customer experience, whether solo or through working with technological partners.

Stop looking for the killer app
I’ve said multiple times on industry panels and I’ll say it again: the killer app that will disrupt the industry as we know it doesn’t exist – don’t waste time looking for it. The killer app that will drive the adoption of open banking use cases won’t be an app, it will be a collection of services that will enable intuitive and strong customer authentication journeys. Using open banking for a wholesale reinvention of a process or the launch of a new product can be risky, and shouldn’t be the first port of call for financial executives looking to take the plunge.

Tried and tested use cases like automated onboarding, income verification and personal finance management have already been proven to help accelerate and streamline decision-making processes, risk analysis, and the verification of identity, assets and liabilities. Taking advantage of these use cases will ensure that businesses can unlock more value, before pursuing riskier and lengthier use cases that have a longer lead-time for companies to reap the rewards.

Embrace smart partners
The open banking journey is one that financial institutions and fintechs have embarked on hand in hand, and there has already been so much progress. However, it’s not guaranteed that the industry will continue along the same vein. That’s why institutions must continue to partner with specialist fintechs rather than seek solely to develop new competencies in-house. These partnerships can serve a strategically important role for both partners, so it’s important that they are done right. A potential technology partner needs to be carefully scrutinised to ensure they can be onboarded smoothly and securely.

Open banking’s core values of empowering choice, competition and innovation by democratising access to data across financial services are now something the financial services industry has begun to embrace with both hands – whether out of necessity or otherwise. Over the coming decades, it’s safe to assume that these conversations will continue and open finance and open data will become more topical – producing a tailwind for open banking and innovation. We are still at the beginning of the open journey. The institutions set to prosper are those able to translate the open banking opportunity into concrete strategy. Only then will this have been a successful revolution.