Open banking is reshaping the financial services landscape by giving consumers greater control over their financial data and encouraging new forms of competition and innovation. As financial institutions adapt to a world where customers can more easily share and manage their information, many are rethinking their traditional role. This shift is prompting a broader discussion about what consumers truly need from their banking relationships and how banks can deliver long-term value beyond basic financial transactions.
The article outlines the broad flattening underway in the banking sector, particularly in Europe, where open banking and clear ownership of the records of one’s own financial activities is coming to be realized in 2018.
In response to this, we asked, ‘What is a bank for?’. We wanted to start with a beginner’s mindset – it’s a great place to start when changing something fundamentally. If you started to design a bank with people from banks, you’d end up with just another bank.
We took the concept of a bank apart and reimagined a couple of the common interactions, with the additional lens of making users better off in the long term. Here’s what that might look like:…
Mercator Advisory Group’s ongoing examination of the sea change taking place for financial institutions catering to consumers aligns with the theme of the article. We believe those FIs actively engaging in adopting a fiduciary role when engaging with consumers will be better able to demonstrate the value-add and expertise most consumers would benefit from and seek in managing their financial lives. This central theme in our 2017 research agenda will figure prominently in an upcoming research report looking at Banking as a Platform, due out next month.
The evolution of open banking presents financial institutions with an opportunity to redefine their purpose and strengthen customer relationships. Rather than focusing solely on products and transactions, banks that embrace a more advisory and fiduciary-oriented role may be better positioned to help consumers achieve their financial goals. As open banking continues to mature, institutions that prioritize transparency, trust, and customer outcomes are likely to be the ones that thrive in the changing financial services ecosystem.
Overview by Joseph Walent, Associate Director, Customer Interactions Advisory Service at Mercator Advisory Group
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