Our Chief Customer Officer, Elliott Limb recently discussed open banking with fintech entrepreneur and Fidor founder, Matthias Kröner in an episode of Breaking Banks Europe, the podcast series where founders, regulators and leaders discuss innovating in the rapidly evolving Fintech scene. Listen to his interview here.
For decades, big banks have invested money and talent in incubators, working on projects they knew could fail. Their bank-centric approach to finance and lack of collaboration with other market players have prevented consumers from realising the potential to move, manage and make the most of their money - they failed open banking.
They did so because they saw it more as a threat than an opportunity.
Fintech innovation may have cancelled this type of bank-centric culture in favour of financial openness and inclusivity in the last years, putting collaboration among fintechs on the roadmap, and the customer at the centre of everything they do. They have built loyalty with consumers and are showing how useful open banking can be. In one sentence: they have put their ecosystem (the bigger picture) in front of their egosystem.
So what is open banking, and how fintechs work collaboratively in order to achieve that? It can get very technical, and everything is just a google search away, so let’s take another avenue.
Every financial decision people make is based on personal experiences and worldview, and while open banking today isn’t something that people necessarily understand and trust, API-driven SaaS platforms like Mambu are helping fintechs bring banking closer to people. These ecosystems therefore make it simpler and expose how open banking permeates everyone’s lives, supporting our lifestyle, our way of thinking and working.
But is this enough to make open banking easier to understand for consumers?
The numbers speak for themselves: 80% of people use open banking, but 60% don’t know they do*. This means people are using open banking and open banking apps in their daily lives, they just don’t know it’s open banking. Moreover, calling banking ‘open’ raises people’s concerns about data and privacy. They fear they are giving away something they’re not getting back.
To be truly customer-centric, shouldn’t we then talk about smart banking?
Obviously, it’s not just the name - it’s the return to a digitized version of relationship banking, the concept of servicing and making life easier while protecting personal information, although not all customers can join the dots on it, yet. There also needs to be clarity on the interaction between parties in the background, how they access customers’ data and how they use it in order to achieve the benefits of open banking.