Open banking holds the potential for financial institutions to create new business models and open new doors for consumer engagement, but the concept also requires careful planning and self-evaluation.
Andrew Steadman, vice president of product management for Fiserv who works with financial institutions in the U.K., offered these steps to help financial institutions gauge how prepared they are for open banking.
1. Present a Unified Front
Don't take a fragmented approach to preparing for open banking. The goal is to solve for open banking requirements once across all systems rather than repeating the process for each line of accounts and services.
2. Review Your Technology
In the same ways that legacy platforms need to be upgraded, the technology itself often does not lend itself to rapid change in the open banking environment. Is your technology still relevant? Are you using automation in the most effective ways?
3. Streamline Operations
Open banking has the potential to deliver a vast array of new financial services, but operations have to be in lockstep with the technology. Traditionally, financial institutions aren't well-positioned for frequent operational changes, but that's going to be the standard with open banking. Be agile. Have a highly trained staff. Be ready to adapt to multiple, frequent changes in response to third-party requests for access.
Think about open banking as the start of something rather than as a point in time.
4. Watch for Opportunities
Even where open banking is regulated, it's more than a compliance requirement. It's also an opportunity for new business. For instance, while financial institutions are opening their APIs, their competitors will be doing the same. That presents the potential for new business. Is your leadership prepared to take advantage of the opportunities? Think about how to capitalize on open banking, not just comply with it.
5. Adjust Your Perspective
Think about open banking as the start of something rather than as a point in time. Yes, there is a date at which banks in regulated countries must have their APIs in place. But that's just the start of the changes. This isn't Y2K. It's about getting to the starting line and then continuing. It might start with checking accounts, but it will soon move to lending and other services.