By Hans Tesselaar, Executive Director, BIAN
The financial services sector has witnessed immense change over the last several years, caused by a combination of new regulation, increased competition from new market entrants and the changing needs of the consumer.
Our research found that 37% of financial services professionals believe that customer demands will drive the most significant change over the next few years. This has made me start to think about this change and how financial institutions can best create an expanded ecosystem to help provide the best possible experience for the consumer.
This is an idea that was inspired by our members at the Shanghai Pudong Development Bank (SPD Bank). In a webinar they hosted in November, SPD Bank shared a concept they call the ‘Panoramic Banking Strategy’.
Panoramic Banking Strategy is the idea that banks can build a platform-based ecosystem around the needs of the customer life cycle and production cycle. This ecosystem would share information around the brand, channel, customer, technology and other resources with business partners. This approach would require the intelligent use of data to determine customer requirements, allowing the bank and its partners to provide the customer with financial and non-financial products and services aligned with their needs.
This approach gives a new and much broader meaning to ‘Open Banking’.
Open banking as we experience it today is a free interchange of data between banks, consumers and aggregators to make life easier for the consumer, while still focusing on financial transactions. Today, the customer requires is to do less and get more, and spend less but gain more!
In SPD’s vision, Open Banking includes a wider range of service for their customers outside but related to financial services. In the webinar, SPD discussed a few examples of how this could be done. One of these examples showed how the consumer could experience a seamless travel experience, orchestrated completely by the bank. So for example, the customer could book their travel through the bank, the bank could then identify the correct currency and exchange rate for the customer based on their travel location, help the consumer budget for while they’re away and then reverse the exchange rate once they return home.
A good orchestrator would be able to provide these services at scale across its entire network at a low cost to make it worth the consumer’s while. Open banking has already shown banks can act as the preferred orchestrator (trusted party) in many scenarios. The bank may even be better than social media (Facebook), eCommerce (Amazon) and search engine (Google) in their special domain or scenario.
As we enter the new year, I strongly believe that banks should look to broaden their horizons and consider the services they can provide the consumer. The examples provided by SPD Bank should provide us with inspiration as to what this looks like and help us ride the wave of change for years to come.