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Peter Zuber
Managing Director Financial Technology
21.03.2018
Good presentations matter!
Netcetera Powerpoint TemplateChances of Open Banking
Drivers, Approaches & Implications
In the perspective of the customer and the incumbent
Enabling
Financial Services
for the Future
Content
Drivers of Open
Banking
Implications for
Customers, New
Entrants and
Incumbents
Approaches to
Open Banking
Conclusion
2 3 4 5
06 11 14 19
2
What is Open
Banking?
1
03
3
The democratization of
data
4
The democratization of
data
It forces incumbents to make proprietary data
available to anyone with the owner‘s
permission to access it
 Limited access to data & sharing
What is open banking?
5
Customers
Financial institution
Closed Ecosystem
 Data access & sharing bi-directional
 Business models are distributed
 Banks serve as platforms
Open Ecosystem
Customers
Financial institution Government
Utilities
Payment
providers
An open ecosystem offers a new network of tech-enabled functionalities
Regulation Enabling Technology
Competition Consumer demand
6
1
3
2
4
Open banking is being pushed into the mainstream by four main trends
4 main drivers of open banking
7
EU
PSD2 requires every financial
firm to create “communication
interfaces”
Asia Pacific
Singapore, Malaysia and
Australia all consider
mandating banks to provide
access to data
UK
Open Banking Rules require
banks to make a wide range
of data available
USA
Legislators have hinted that
open banking regulations
may be introduced in the
USD
Regulatory trend is clear – more banks are being compelled to share data
1 - Regulations
8
There are two main types of APIs
Private APIs
Allow internal systems to communicate
Example: Bank‘s mobile app connects
to bank‘s core system
Open APIs
Enables third party developer access
Examples: Paypal has APIs allowing third
parties to built their own apps
Most systems can connect to APIs with little adaption, are cloud-based, and accessible 24/7
2 – Enabling Technologies
Uber app (Google Maps)
Mobile-core connection
9
Emergence of non-traditional players
Emergence of new service offerings
Fintechs provide a threat to existing revenue streams and to direct customer relationships
New service offerings provide additional value to customers
New Entrants are developing innovative products that customers want
3 - Competition
10
New expectations
Digital & social experiences
are redefining the use of
technology in banking
Better mobile connectivity
Due to the interconnected
web, customers favor mobile
interactions
Contextual service
Need for intelligent, contextual
services in daily interactions
with providers
Technology companies have altered consumer expectations
4 – Consumer demand
11
NEW DATA SOURCES
Open Banking gives New
Entrants access to customer
data, a valuable commodity
GREATER VIABILITY
New Entrants
can now directly connect to
bank, making them more
viable.
COLLABORATION
Banks more willing to
collaborate, as open APIs
make partnerships simpler
Implications - Opportunities for New Entrants
Open banking offers New Entrants a new universe of opportunities to build business models
Implications - How are incumbents responding?
12
Reactive
Proactive
 Banks build strategy to get
the most from open banking
 Maintain and extend a
dominant position
Banks’ strategies on open banking fall into two camps
 Afraid to loose customer
relation and damage the
bank‘s position
 Late followers might miss the
train
Implications - Why do customers care?
13
Customers focus on services delivered
Services are more personalised/tailored
Access to more suitable, cost-effective products
Enhanced speed, convenience & simplicity
Aggregated accounts enable new insights
Approaches
14
App-store
Model
Sandbox
Model
Act as an
enabler
Charging for
access
Incumbents are adopting a number of open bank approaches
1 – App Store Model
15
Crédit Agricole‘s CA Store
 In 2014, Crédit Agricole introduced their CA
Store
 Customers and Start-ups can register ideas
 Customers can download apps that were
developed by the bank itself or by third-
parties
 Third parties get access to open APIs in
order to build tools
Banks can control the use of customer data and have lower development costs
https://www.creditagricolestore.fr/
2 – Sandbox Model
16
BBVA‘s API Market
 BBVA runs a proprietary platform, called API
Market
 They offer a growing API catalog regarding
specific topics
 Developers can choose whether they want to
experiment in a „sandbox“ environment with
fake data or operate in production
environment with real data
BBVA uses this approach to develop products in a much faster and cheaper way
https://www.bbvaapimarket.com/
3 – Enabler Model
17
Smaller banks
Large bank‘s platform The Enabler Model
 The construction and implementation of
open APIs will be too complex and too
expensive for smaller banks
 The large, enabler bank would charge other
banks a fee for using its platform
Large banks act as enablers for smaller banks giving them access to their platforms
4 – Charging for access
18
Charging for access to APIs
 Charging third parties is the easiest way for
banks to benefit from open banking
 Apart from being a ‘weak‘ strategy and going
against the aim of open banking, regulation
may prevent banks from charging for access
Third parties
$ $$
Banks could charge third parties for accessing their APIs (if the regulator allows it)
5 Conclusion
19
Focus on customer needs, individualize products and services, improve user experience and
anticipate customer needs. While doing so, always stay visible!
Banks actively driving open banking initiatives will be better positioned to maintain
and extend their dominance
Banks can take various approaches to implement open banking, among other the app store
model, the sandbox model, and acting as an enabler for smaller banks
Open Banking impacts you! – Many banks successfully started initiatives already
The race has begun
Visit us
www.netcetera.com
www.redesigning-fs.com

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Chances of open banking

  • 1. Peter Zuber Managing Director Financial Technology 21.03.2018 Good presentations matter! Netcetera Powerpoint TemplateChances of Open Banking Drivers, Approaches & Implications In the perspective of the customer and the incumbent Enabling Financial Services for the Future
  • 2. Content Drivers of Open Banking Implications for Customers, New Entrants and Incumbents Approaches to Open Banking Conclusion 2 3 4 5 06 11 14 19 2 What is Open Banking? 1 03
  • 4. 4 The democratization of data It forces incumbents to make proprietary data available to anyone with the owner‘s permission to access it
  • 5.  Limited access to data & sharing What is open banking? 5 Customers Financial institution Closed Ecosystem  Data access & sharing bi-directional  Business models are distributed  Banks serve as platforms Open Ecosystem Customers Financial institution Government Utilities Payment providers An open ecosystem offers a new network of tech-enabled functionalities
  • 6. Regulation Enabling Technology Competition Consumer demand 6 1 3 2 4 Open banking is being pushed into the mainstream by four main trends 4 main drivers of open banking
  • 7. 7 EU PSD2 requires every financial firm to create “communication interfaces” Asia Pacific Singapore, Malaysia and Australia all consider mandating banks to provide access to data UK Open Banking Rules require banks to make a wide range of data available USA Legislators have hinted that open banking regulations may be introduced in the USD Regulatory trend is clear – more banks are being compelled to share data 1 - Regulations
  • 8. 8 There are two main types of APIs Private APIs Allow internal systems to communicate Example: Bank‘s mobile app connects to bank‘s core system Open APIs Enables third party developer access Examples: Paypal has APIs allowing third parties to built their own apps Most systems can connect to APIs with little adaption, are cloud-based, and accessible 24/7 2 – Enabling Technologies Uber app (Google Maps) Mobile-core connection
  • 9. 9 Emergence of non-traditional players Emergence of new service offerings Fintechs provide a threat to existing revenue streams and to direct customer relationships New service offerings provide additional value to customers New Entrants are developing innovative products that customers want 3 - Competition
  • 10. 10 New expectations Digital & social experiences are redefining the use of technology in banking Better mobile connectivity Due to the interconnected web, customers favor mobile interactions Contextual service Need for intelligent, contextual services in daily interactions with providers Technology companies have altered consumer expectations 4 – Consumer demand
  • 11. 11 NEW DATA SOURCES Open Banking gives New Entrants access to customer data, a valuable commodity GREATER VIABILITY New Entrants can now directly connect to bank, making them more viable. COLLABORATION Banks more willing to collaborate, as open APIs make partnerships simpler Implications - Opportunities for New Entrants Open banking offers New Entrants a new universe of opportunities to build business models
  • 12. Implications - How are incumbents responding? 12 Reactive Proactive  Banks build strategy to get the most from open banking  Maintain and extend a dominant position Banks’ strategies on open banking fall into two camps  Afraid to loose customer relation and damage the bank‘s position  Late followers might miss the train
  • 13. Implications - Why do customers care? 13 Customers focus on services delivered Services are more personalised/tailored Access to more suitable, cost-effective products Enhanced speed, convenience & simplicity Aggregated accounts enable new insights
  • 14. Approaches 14 App-store Model Sandbox Model Act as an enabler Charging for access Incumbents are adopting a number of open bank approaches
  • 15. 1 – App Store Model 15 Crédit Agricole‘s CA Store  In 2014, Crédit Agricole introduced their CA Store  Customers and Start-ups can register ideas  Customers can download apps that were developed by the bank itself or by third- parties  Third parties get access to open APIs in order to build tools Banks can control the use of customer data and have lower development costs https://www.creditagricolestore.fr/
  • 16. 2 – Sandbox Model 16 BBVA‘s API Market  BBVA runs a proprietary platform, called API Market  They offer a growing API catalog regarding specific topics  Developers can choose whether they want to experiment in a „sandbox“ environment with fake data or operate in production environment with real data BBVA uses this approach to develop products in a much faster and cheaper way https://www.bbvaapimarket.com/
  • 17. 3 – Enabler Model 17 Smaller banks Large bank‘s platform The Enabler Model  The construction and implementation of open APIs will be too complex and too expensive for smaller banks  The large, enabler bank would charge other banks a fee for using its platform Large banks act as enablers for smaller banks giving them access to their platforms
  • 18. 4 – Charging for access 18 Charging for access to APIs  Charging third parties is the easiest way for banks to benefit from open banking  Apart from being a ‘weak‘ strategy and going against the aim of open banking, regulation may prevent banks from charging for access Third parties $ $$ Banks could charge third parties for accessing their APIs (if the regulator allows it)
  • 19. 5 Conclusion 19 Focus on customer needs, individualize products and services, improve user experience and anticipate customer needs. While doing so, always stay visible! Banks actively driving open banking initiatives will be better positioned to maintain and extend their dominance Banks can take various approaches to implement open banking, among other the app store model, the sandbox model, and acting as an enabler for smaller banks Open Banking impacts you! – Many banks successfully started initiatives already
  • 20. The race has begun