With ecosystem partnerships being recognized and valued, open banking willeventually transition into an Open X phase in which standardized APIs, insightsfrom customer data, and effective collaboration prevail. Open X drives data-useexcellence that fosters a seamless exchange of resources, improved experiencefor customers, and expedited product innovation.
As the industry moves from unbundling to rebundling of services, open banking mastery may provide valuableshort-term operational advantages. However, four fundamental shifts in the industry are altering the FS paradigm:
1. A move away from products to an emphasis on customer experience
2. Less importance on assets and more on data
3. Shared access instead of ownership
4. Partnering in lieu of building or buying
This new paradigm sets the scene for Open X – and banks need to prepare strategically for the long gameversus getting caught up with quick fixes or wins.
Application programming interfaces (APIs) are set to play a vital role in the Open X environment, and banksthat lead API standardization initiatives and look for real monetization value with indirect models (such as referred business and actionable insights) will extract maximum value.
While some established banks and FinTech firms may not be convinced, Open X is likely to alter the financial services (FS) business spectrum. Moreover, within the new ecosystem banks will not necessarily own the overall customer experience. However, it will be essential that they seamlessly integrate their services as a part of each customer’s overall journey and experience.
With FinTechs struggling to scale up operations and some banks fumbling when it comes to effective FinTech collaboration, structured collaboration offers a pragmatic path forward.
Banks and FinTechs will need to work cooperatively with other ecosystem players to surmount concerns andobstacles around open architecture adoption and implementation.