1. Open banking has the potential to significantly change the small business banking space by enabling access to bank data and payment rails. 2. Customer-driven innovation should be at the heart of developing an open banking strategy, including understanding customer needs and pain points. 3. APIs will fuel innovation by allowing developers to build new applications and solutions on top of bank services and data.

1. CUSTOMER DRIVEN
INNOVATION IN
SMALL BUSINESS
BANKING
THE INNOVATION IMPERATIVE OF OPEN BANKING
Stavros Apostolou | VP Innovation Propositions | Barclays Business Banking
Unrestricted

2. 2 | Customer driven innovation in open banking for SMEs | October 2017
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DEVELOPING AN OPEN BANKING INNOVATION
STRATEGY FOR SMALL BUSINESSES
 What does Open Banking actually
mean?
 The innovation challenge for small
business banking
 Customer innovation principles in
practice
 Case 1: Developing your strategy
 Case 2: API as ingredients of your
strategy
 Case 3: Developing your team

3. WHAT DOES OPEN
BANKING ACTUALLY
MEAN?

4. 4 | Customer driven innovation in open banking for SMEs | October 2017
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OPEN BANKING CAN ACCELERATE DISRUPTION
FOR INCUMBENT BANKS
Access tobank account data Access topayment rails for
new entrants
What changes
 Tailored products
 Financial advice
 Credit risk – lending
 Data fusion with 3rd parties
 Identity verification
 Payment revenue erosion
 Reduced deposits
 Reduced payment data for
decision making e.g. lending
 Reduced customer ‘facetime’
Existing business model
disruption
APIconnectivity

5. 5 | Customer driven innovation in open banking for SMEs | October 2017
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BANKS STILL HAVE TOOLS TO
COMPETE
 Customer relationship loss
 Margin erosion
 Product sales loss
 Increased costs of compliance
 Managing cost base
 Ability to execute & innovate
 Legacy infrastructure
 Large customer base
 Resources
 Brand/Trust
 Funding costs
 Accelerate digital initiatives
 Consolidate financial information
 Offer tailored services
 Payment innovation

6. 6 | Customer driven innovation in open banking for SMEs | October 2017
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EMERGING BANKING STRATEGIES
Compliant bank
Product
manufacturer
Relationship
Aggregator
Marketplace
platform
No change –meet minimum requirements
Be the best financial productprovider
Make them available through the new aggregators via APIs
Consolidate financial data in your platform
Offer own products only
Consolidate financial data
Offer best in class products –including other brandsandnon-bank

7. THE SPECIFIC
INNOVATION
CHALLENGE FOR
SMALL BUSINESS
BANKING

8. 8 | Customer driven innovation in open banking for SMEs | October 2017
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SMALL BUSINESS IS A LUCRATIVE AND
DIVERSE RETAIL SEGMENT
Why are SMEs important
 5.5m UK businesses, c600k startups
p.a.; Natural business birth/death rate
 Favorable economics
 High risk - c50% of startups seize after 3
years
 SMEs power the UK Economy
Since 2000, financial technology (fintech) providers have directed morethan 50% of their investments towardcorporate
banking, including the small business segment. ‘
Source:BCG |Getting biginsmallbusiness banking
Source:Accenture& OliverWyman Reports|ONS |highstreet banksannualaccounts
What are their needs
 Diverse lifestyle businesses, contractors,
high tech startups, established SMEs,
charities
 Seek simplicity and speed yet require
personalised experience
 c40% want an arm’s length relationship
with their bank
 Time poor, concerned about keeping their
business safe

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A RICH SMES ECOSYSTEM COMPETES FOR
SMALL BUSINESSES ATTENTION
Advisors &
Accountants
Banks
Small
Business
Payment
providers
InvestorsAccounting software
providers
Government
HMT
Regulators
Workflow apps
Other services (non bank)
Adapted by Oliver Wyman:
Information Business Report

10. CUSTOMER DRIVEN
INNOVATION
PRINCIPLES IN
PRACTICE

11. CASE 1
CHOOSING WHICH
AREAS TO INNOVATE
ON WITHIN 5 WEEKS

12. 12 | Customer driven innovation in open banking for SMEs | October 2017
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WE SET OUT 4 PRINCIPLES
People vs figures 01
Wewishtoobserveand
speaktopeople
Get out of the
building
02
Re-use insight where
possible
03
Form a view
quickly
04Wewillbespending30%
ofourtime
Wewillre-userelevantresearch
Wewould‘ship’whenwehaveformeda view-
wedonotaimforperfection

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UTILISED 7 TOOLS TO GATHER END USER NEEDS
Aday in the life ofa customer
Aday in the life ofa frontline colleague
Segmentation
Aday in the life oftheir business
partners
Secondary research/ Social media
research
PrimaryQual/Quant Research
Fin tech &developer interviews
Investor interviews
Pain points
Desires/Attitudes
Behaviors
• Idea generation
• Economics & business models
Emerging strategies
Best practices
• What do they want
• What you are not doing well
• What do customers tell them
• What is broken in our service
• How can you help them
• Charging models
• Pen portraits and segmentation
• Opportunity size
• How will you partner
• What are they likely to develop
with the tools you give them
• You may be an investor yourself
• What do startups want from you
1
2
3
4
5
6
7
Objectives

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4 LESSONS LEARNED
Thereisvalue tounlockin ‘boring’tasks
Understandyourcompetitors’businessmodels
AI maynotsolveall problemswithoutdomainknowledge
01
02
03
04 Connecting people maybemorevaluablethanbuilding technology

15. CASE 2
CUSTOMER DRIVEN
INNOVATION WITH
APPLICATION
PROGRAMMING
INTERFACES (API)

16. 16 | Customer driven innovation in open banking for SMEs | October 2017
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APIS ARE KEY INGREDIENTS FOR
INNOVATION
Access tobank account data Access topayment rails for
new entrants
What changes
 Tailored products
 Financial advice
 Credit risk – lending
 Data fusion with 3rd parties
 Identity verification
 Payment revenue erosion
 Reduced deposits
 Reduced payment data for
decision making e.g. lending
 Reduced customer ‘facetime’
Existing business model
disruption
APIconnectivity

17. 17 | Customer driven innovation in open banking for SMEs | October 2017
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API ARE EVERYWHERE AROUND
US
Source: Techproductmanagement.com
Source: Programmable web
 Increased product sales
 Let your customers innovate
for you
 B2B sales opportunity
 Partner network opportunity
Business opportunity

18. 18 | Customer driven innovation in open banking for SMEs | October 2017
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APIS FUEL INNOVATION. DRIVEN
BY THE CUSTOMER
The new customer
They develop
 Innovative new apps
 Fused solutions with 3rd
party assets
 Steamlined existing
processes
You expose
 Process
 Data
 Functionality
 Platforms/systems

19. 19 | Customer driven innovation in open banking for SMEs | October 2017
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IF YOU BUILD THEM, THEY MAY
NOT COME
Developersas customers
Nurturingthe developer community
Producthasno UI
Customersupport
01
02
03
04
 Developerpersonas
 Customerrequirements
 Security& performance
 Accesstokeycommunities
 Partnermanagement
 Usecases
 Wikimanagement/Documentation
 Technicalsupportteam
 Developerexperience
 Internalpromotion
 Customertesting
 Complaintsmanagement

20. CASE 3
INNOVATION
SKILLS TO INVEST
IN

21. 21 | Customer driven innovation in open banking for SMEs | October 2017
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FINDING USER NEEDS TO INNOVATE ON IS
THE SINGLE MOST IMPORTANT SKILL
Market leading
The risk averse
(keepsyourtradinglicense)
Thepartneringexpert
(negotiateswithease)
The management consultant
(lurker, finds facts,putsstructure
into chaos)
Thehound
(relentlesslyfindsuserneedsto
innovate)
StrategicEmerging
The fixer
(Influencing skills)
The traditional product
manager
(keeps yourtradinglicense)
The attraction
(well establishedfigure)
Proposition manager
(getsthejob done)
Technologyexpert
(confidently delivertechnology
propositions)

22. 22 | Customer driven innovation in open banking for SMEs | October 2017
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SUMMARY
01
02
03
04
Open bankingcantrigger exciting changes in theSME bankingspace
Customerdriven innovationis attheheartofopenbankingstrategydevelopment
Developersarethenew customersforAPI basedproducts
Whendeveloping new innovationteams,theabilitytoidentityand prioritisecustomer
needs ishugely important