Banking enters its era of openness

The bank­ing sec­tor has had to evolve sig­nif­i­cant­ly over the last decade, but the pace of change is only accel­er­at­ing. The glob­al finan­cial cri­sis sig­nalled a need for some­thing dif­fer­ent, which com­bined with the emer­gence of pow­er­ful dig­i­tal inno­va­tion trig­gered a surge in small upstarts seek­ing to dis­rupt incum­bents with niche, dif­fer­en­ti­at­ed ser­vices across the bank­ing spec­trum.

Spoiled by slick expe­ri­ences from the likes of Ama­zon, Uber and Deliv­eroo, con­sumers desire instant grat­i­fi­ca­tion and per­son­alised ser­vices from their banks too. Their expec­ta­tions, how­ev­er, are more like­ly to be met by the new­er mar­ket entrants that, unbur­dened by lega­cy infra­struc­ture or ven­dor lock-in, can inno­vate and adapt to trends in a faster, more agile way.

“Tech­nol­o­gy enables banks to deep­en their rela­tion­ships with con­sumers and cre­ate a stick­i­er, more cus­tomer-cen­tric ser­vice, but they need to find a way to deal with lega­cy,” says Liad Bokovsky, open finance spe­cial­ist at Axway, a tech com­pa­ny which gives her­itage IT infra­struc­ture new life to help organ­i­sa­tions to dig­i­tal­ly trans­form. “With lots of new com­peti­tors focus­ing on prod­ucts like mort­gages, insur­ance, bank­ing or for­eign exchange, big banks have to fig­ure out how to deal with that, view­ing tech­nol­o­gy as a sym­bi­ot­ic rela­tion­ship.”

The key to inno­vat­ing fast enough to keep up with cus­tomer expec­ta­tions is through open finance, which is about using and shar­ing cus­tomer data in a holis­tic way to enable a bet­ter ser­vice. Open finance is a vision for a much big­ger ecosys­tem that includes more infor­ma­tion about the finan­cial sta­tus of an indi­vid­ual, but also con­nects with oth­er plat­forms and com­pa­nies. A smart­watch, for instance, can tell you about both your health sta­tus and your spend­ing sta­tus.

Nation­wide Build­ing Soci­ety has cre­at­ed an incu­ba­tor pro­gramme, Open Bank­ing for Good, to help peo­ple avoid get­ting into debt. By util­is­ing data and embrac­ing the prin­ci­ples of open finance, which is about achiev­ing a 360-degree cus­tomer view, the pro­gramme enables peo­ple to bet­ter see if buy­ing some­thing or tak­ing mon­ey out the bank might get them into trou­ble, by using tool­ing that can help them avoid finan­cial traps and pit­falls.

Axway pow­ers dig­i­tal trans­for­ma­tion by inte­grat­ing all the lega­cy and mod­ern tech­nol­o­gy appli­ca­tions in banks, with appli­ca­tion pro­gram­ming inter­face (API) man­age­ment that allows them to build mar­ket­places and ecosys­tems, which help them to grow. The com­pa­ny also removes com­plex­i­ty for devel­op­ers of bank­ing appli­ca­tions by automat­ing their process­es so they can con­cen­trate on trans­for­ma­tion­al fron­tend tasks rather than lega­cy inte­gra­tion at the back­end.

“Cus­tomer churn is a very expen­sive cost for banks. Pro­vid­ing a bet­ter cus­tomer expe­ri­ence keeps peo­ple loy­al and reduces that churn,” says Antho­ny Bad­ger, finan­cial ser­vices lead at Axway. “But it is very hard for big banks to intro­duce new inno­v­a­tive finan­cial prod­ucts. Many of them are not going to change their back­end, those sys­tems of records. We pro­vide a way to inte­grate with them so they can adapt and respond more quick­ly to new trends and cus­tomer expec­ta­tions. Our mid­dle­ware is an inno­va­tion lay­er that expos­es this data to con­sumers.”

The sheer breadth of the open finance ecosys­tem is exem­pli­fied by Axway’s work with a lead­ing auto­mo­tive man­u­fac­tur­er result­ing in finan­cial inte­gra­tion, which means when some­body pur­chas­es a car they can sim­ply press a but­ton to get insur­ance for their first sev­en days, with­out hav­ing to pro­vide any more infor­ma­tion.

In the future, these dri­vers will also be able to sub­scribe to a ser­vice where­by their car can find, choose and pay for their park­ing space, or order and pay on their behalf when going to cof­fee dri­ve-throughs. The finan­cial ecosys­tem will be such that, for some cus­tomers, it might not even begin with an inter­ac­tion with a finan­cialser­vices organ­i­sa­tion.

“We are going to see all sorts of com­pa­nies imple­ment­ing dif­fer­ent APIs in the open finance ecosys­tem,” says Bad­ger. “Banks will invite com­pa­nies to be part of their ecosys­tem – a co-cre­ation of APIs – and there will be a uni­fied cat­a­logue of all APIs avail­able. But banks won’t be like an island, they will also be part of oth­er ecosys­tems. There will be more inte­gra­tions between organ­i­sa­tions and more offers avail­able to con­sumers.

“Axway will help organ­i­sa­tions cre­ate those cat­a­logues and co-cre­ation capa­bil­i­ties, and expose these assets in a secure way. We are part of the core jour­ney for both the cus­tomer and the finan­cial ser­vices com­pa­nies.”

For more infor­ma­tion please vis­it https://blog.axway.com/industries/banking-insurance

Spon­sored by

Axway