COMMENT
IBS Journal July 2016
45
Collaboration: the future of banking
Daniel Gonzalez, Strategist, SapientNitro
Tech and legislation are forcing banks to do things they have historically not been good at: openness and collaboration. FinTech companies are not only completely re-defining how we use specific products or services, they are also building open platforms and embracing collaboration to compete with banks on more fronts.
Through APIs, developers are able to build systems that talk to eachother. This results in a connected experience that enables customers to use a range of financial services in new and exciting ways.
But this is only half of the story. The incoming compliance with the PSD2 regulation and open banking will force banks to allow third parties to access their data, opening their walled garden for the first time in history. As soon as third parties can plug into this data, they are able to build better experiences on top; further weakening traditional banks’ role in our everyday life.
Think about the limitations online banking has today and all the improvements that leaner, savvier and generally more customer-friendly companies bring. With so much to fix, the incumbents might not be able to keep up.
Mobile-centric ventures like Mondo are already redefining current accounts and they are built on the premise of connected collaboration. Mondo’s strategy is to become a FinTech hub and deliver services that go beyond its core
product. By connecting to companies like TransferWise or LendingClub, it could offer low interest loans and cheap international transfers within its app. This allows it to compete with banks on more fronts, whilst providing a superior customer experience.
Banks that embrace open platforms and collaboration through APIs, can connect externally – to other companies – and internally by connecting their products and teams.
Some of the bigger players are already adopting this new connectivity in meaningful ways. BBVA’s API market provides clever products that vendors can integrate to their websites. LHV, Estonia’s largest domestic bank, connected with TransferWise to provide “transparent and easy-to-use international money transfer service”. Capital One now allows its customers to do voice banking via Amazon Echo. Customers can ask Echo’s virtual assistant, Alexa, to check their most recent transactions or pay a credit card bill.
The key challenge is moving away from the ‘build it and they will come’ notion that permeates the culture of most traditional banks and into a collaborative model where they connect with the best services that customers are already using. For those that manage it, the potential rewards could be transformational.
www.ibsintelligence.com
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