The data associated with payment transactions are an important element of the changing payments landscape.
Overview of Open Banking
Open banking is the decoupling of financial services where banks own the services, and third parties own the user interface. Third parties connect to banking services through APIs. Motivated by goals of increasing competition and improving customer service, it is an increasingly common phenomenon and may impact your organization. You may be wondering:
What regulatory trends and standards are likely to develop in the markets that we operate or would like to operate in?
What is the right strategic response to the open banking trend?
How well positioned are we to maintain our competitive advantage?
What are the potential use cases for open banking?
While it may seem like a threat, are there opportunities we should be proactively pursuing?
How is open banking similar or different to banking as a service?
Financial institutions provide third-parties with access to customer-permissioned data through APIs (often includes payment initiation as an additional feature).
Banking as a Service
Financial institutions provide access to specific products and services (such as payment, onboarding, lending), allowing non-banks to offer financial products and services outside of the financial institutions’ customer base
Open banking is a growing global phenomenon. What opportunities and risks do you need to be prepared for?
The GlenbrookTM team applies our 3C’s framework to help develop, test, and confirm hypotheses related to the implications of open banking to your organization:
- Control – Open banking, when applied, allows consumers to own their data, have the authority to grant permission to third parties to access that data, know where their data is being used, and have the ability to revoke permission at any time.
- Competition – Open banking increases competition on multiple fronts. Breaking the former monopoly on customer data, third party providers can create innovative products and services that challenge financial institutions as well as other providers. Furthermore, by reducing the burden associated with switching banks, consumers can more easily move and add accounts, forcing financial institutions to compete to attract and keep customers by providing the best experience.
- Choice – Building on the tenets of control and competition, open access to customer data creates a foundation for innovation, which in turn gives consumers more choice when it comes to the financial products and services they use.
Example engagements include:
- We helped a major banking client shifting to an open banking posture prioritize its API offerings and understand the implications of their strategy.
- The digital platform team at a global bank engaged the GlenbrookTM team to perform country-specific research to inform its Open Banking API strategy.
- We conducted an industry scan to inform a global payments network about the emerging open banking trend and to provide strategic guidance on how to respond.
Payments Boot CampTM workshops
Look to our workshops and webinars to help you understand the fundamentals of open banking and the implications to security, competition, and your organization.
A global retail bank was in the process of a multiyear digital transformation. As part of this transformation process, the bank wished to create an open banking API offering for internal users and external clients. Glenbrook was asked to help the bank develop and prioritize its API roadmap to ensure it aligned with capabilities that were most valuable to its target users.
A central bank wanted to better understand other market approaches to open banking, with a particular emphasis on payments initiation. Glenbrook conducted a multi-country review to help inform the bank’s efforts.
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