Banks which have embraced collaboration and adopted a proactive approach to regulation are now leading on open banking in Europe.
ABN Amro, Nordea Bank, Deutsche Bank and Santander Bank have all adopted the spirit of open banking, investing substantial amounts of investment in new technology to develop unique customer experiences, according to Temenos’ Kam Chana.
Chana has led big innovation projects while working for banks such as Fidelity and Blackrock. Having worked during the Dot Com period of the 1990s and early 2000s, she has also experienced earlier challenges with innovation and change.
Speaking to clients last week at both the AFR Banking and Wealth Summit and a client lunch in Sydney, the London-based digital strategist spoke about the key lessons the business and clients have learnt from moving to an open banking framework.
Temenos a global software firm has done research with many of the big banks in the region including Barclays, UBS, ING and Credit Suisse on their open banking initiatives.
According to Chana, one of the key lessons is the need to collaborate. “Three years ago, many banks in the UK and Europe resisted the move to open banking. The mood has since changed, with the initiative a key priority for these businesses,” she said.
While Australian banks are yet to embark on their journey, Chana said that a key learning that has come from the tier one banks in the UK is the need to collaborate and open up businesses to players such as the fintechs.
“There is a perception in the UK that Australian banks are a lot friendlier with each other. I encourage banks here to talk and play with each other. You can’t’ build everything yourself.”
Setting the roadmap
She acknowledges that parts of Europe are applying the “lifeboat innovation” – where very large banks grappling with legacy systems and reactive management boards.
These banks are tagging on lifeboats in the form of hiring millennials and hipsters.
“They give them coffee and nice places to create and innovate. Despite the resistance these banks recognise it is better than doing nothing.”
However, “the pioneering banks” as highlighted earlier are leading in areas such as collaboration.
Nordea Bank onboarded nearly 700 fintechs in order to identify opportunities for value while even neo banks in the UK are seeking partnerships.
Starling has “grown quickly” because Anne Boden – Starling CEO - has “accepted that as a bank you can’t’ create everything”.
The bank has already inked deals with peer-to-peer businesses such as TransferWise.
Similarly, Barclays has partnered with fintechs and Monzo has partnered with Moneybox.
“By playing together these banks and fintechs are creating much more innovation.”
Chana also urged Australian banks to start planning now for an open banking framework.
When the initiative went live in Europe and the UK in January, six of the nine banks who were in charge of being compliant with open banking failed the deadline.
“Time was a factor. The deadline comes a lot quicker than you think. You need to get open banking on your roadmap and start planning for it now.”
It is also important to be proactive with regulation.
Banks such as Credit Agricole, BBVA and Fidor had already moved to open banking before the introduction of open banking. She acknowledged that banks in other parts of the world where open banking is yet to go live have already set up an open platform with their data and APIs – DBS being a leader and a first-mover in Asia.
For Chana, open banking is also about opening up infrastructure, relationships and culture. It was also important to go beyond the approach of just monetising data.
“It’s about using data to create new products and services. Open banking is also about finding new ways to reach the customer and create new revenue opportunities for banks.”