Open banking opens up a whole new window of opportunities: Banks and smaller Fintech companies alike are challenged to develop new ways of creating value for their customers and develop new types of relationships with their customers. It requires cultural changes in the organization and letting go of existing business models to transition into the unknown. It also brings up new concerns, for instance, who is reliable when issues arise with a financial product?
In our Masterclass on Open Banking, dr. Markos Zachariadis and Professor Hans Berends talked about the different implications of PSD2 and open banking for financial services. We went beyond some common industry knowledge and delved into the challenges around platform and innovation ecosystems origination and development to identify the issues as well as opportunities in this new banking paradigm. In addition, we explored the strategic responses in this new competitive landscape.
Thanks to a great group of participants (consultants and (senior) managers from a variety of international firms such as Rabobank, PwC, DnB, and ABN AMRO) the discussions helped all involved to make sense of the challenges and opportunities of open banking for the financial industry. As one participant explained about the whole day:
The masterclass gives a great overview in one day what the risks and opportunities are of the future of digitalisation and impact on banking!
Below is a brief overview of the topics that were discussed during the masterclass:
Financial Digital Disruption – Open Banking, PSD2, Data, APIs, and Trust
In the first part of the masterclass Markos talked about the different changes that are going on and that affect basically all financial institutions. What did banks look like before several major technologies existed? How did the Payment Systems Directive II come to be? And now that banks have to open up (or close off) their data when customers say so, how can financial institutions develop viable business models? To answer such questions, Markos talked about the relevance of new fintech business models, collaboration with existing fintechs, and APIs. One major implications of PSD2 and open banking in general is that banks will incrementally change to a more modular way of organising. In some aspects, banks will have to offer their services as bank-as-a-platform. By discussion a variety of examples of both banks and fintech startups, participants learned the different opportunities and challenges that are associated with open banking.
Platforms & Ecosystems – Collaboration, Innovation, Architecture, and Strategies
In the second part of the masterclass Hans continued the conversation about the importance of banking as a platform by discussing the challenges around platforms and ecosystems. How can organizations collaborate in innovation ecosystems? What types of ecosystems are there? And what strategies can firms employ to successfully launch new platforms? Hans addressed these questions by talking in detail about topics such as the architecture of platforms, the importance of modularity, how to manage platforms, and several lessons we can draw from the research conducted at KIN. He emphasised the complexity of setting up and launching platforms, and one major take away of his talk is that the choice for the type of platform (open or closed) should not be taken lightly, as he talked in detail about the ecosystem around the Philips Hue lamps. Through Hans’ talk, participants learned not only the chances but also the challenges of collaborating in platforms & ecosystems.
Building on these two talks, participants could start to work on their own ideas. By interacting with various professionals from different firms, participants became inspired to cultivate some of the great opportunities (and challenges) of open banking.