6
vritti
Mobilution
September 2017
The main driving forces behind
“Open banking” becoming
mainstream phenomenon are:
REGULATIONS
Quite a few regulators have begun mandating that banks
open up the data held by them and share them with 3rd
party applications. Initiatives such as PSD2 from EU and
Open Banking Standards of UK will kick in from 2018,
and banks operating in Europe will not have the luxury of
not sharing data and allow customers greater control
over what they want to share with whom. Even Australia
has announced in its 2017-18 budget, a move towards
open banking regime and has set up a committee to
finalize the provisions. The head of competition Bureau
has indicated that the Canadian government is looking at
regulatory action to promote sharing of transactional
data between banks and fintech companies.
COMPETITION
The bar for customer experience is being set by fintechs
which offer frictionless digital banking experience through
mobile phones for a lesser fee than traditional banks.
Incumbents can lower their cost of operations by adopting
technology to automate back end operations and decrease
personnel required to service customers by offering low-
cost self-service channels to their customers.
CUSTOMER EXPECTATIONS
Consumers are increasingly getting comfortable with
digital only channels such as smartphones to meet their
banking needs, and expect the banking experience to be
similar to those offered by technology led organizations such
as Uber or Starbucks. If incumbents fail to meet customers'
expectations, they risk being disintermediated by fintechs,
who will build relationship with consumers.