Accenture has estimated that by 2020, €61 billion or about 7% of all banking revenue in Europe will be associated with Open Banking enabled activities in some shape or form. This trend represents a remarkable opportunity for the fleet-footed to capitalise on the opportunities that it presents.
Companies like Apple and Google are making an increasingly larger share of their revenue from their app stores. They essentially provide the platform and developers build all sorts of innovative and creative apps that run on the platform and generate revenue for everyone. What’s remarkable is that it’s not a zero-sum game. That revenue is not necessarily being poached away from a competitor – it is something extra that the industry is generating because it is changing consumer behaviours.
An open ecosystem
However, developing thousands of such apps in not really something that a single company can do, which is why an open ecosystem is necessary. Moreover, it is not just about the ability to produce so many different apps, but its also about coming up with new ideas and new products or services. This can only happen with multiple entrepreneurs brain-storming over what to create next.
Success in such an environment will depend on a few things:
- Being the first to market. The European regulators are obviously making a regulatory push in this direction, but Asian and American banks are already on the move as well. No one wants to be left behind. Many banks already have dozens of apps developed by third-party developers that they are hosting and providing to their customers. Indeed, some of these apps may not catch on, but many will. And they will become game-changers.
- Another way to win this open banking bout of the digital banking tournament is by providing the most robust and capable platform to developers. Ideas are nice, but implementation is what really makes or breaks a product and developers want a platform that helps them implement their ideas and bring them to fruition.
Finally, banks require the flexibility to think like entrepreneurs themselves. Banks frequently have large complex system landscapes and may find it harder to overcome the internal resistance and inertia, as compared to those who outsource or share-out operational processes and IT platforms amongst partners and service providers.