PSD2 & Open banking have propelled banks into their next generation of services, whether they are onboard or not.
Regulation has kick-started a process that has deep impact in the industry. With these regulations, the access to the information (and data) as well as the permission to engage with consumers through GDPR, have come together to democratize access to historic data that can become the fuel of new propositions and business models that can very well remove layers of value from banks, while leveraging the pipes of the industry – also known from the TELCO industry as “dumb-pipes”.
However, there is opportunity in this threat.
The mandatory opening of API’s can be enhanced with the adoption of microservices, with these beginning to break the deadlock of decades of legacy getting in the way of progress.
With the new powers of data science and artificial intelligence, comes the need to explore the unique data sets the industry has access to – individual, transaction, location, timestamps – and identify life events, triggers and opportunity to pivot from passive and cumbersome products filled with painful processes, to proactive value propositions that focus on enhancing the outcome and impact it might have on each customer’s life.
These value propositions are not banking products – even though they might leverage or monetise some of them – and they will certainly have different business models, ones that will charge fees or subscriptions for an outcome, rather than a process.
These products need to meet the expectations of a continuously more digital audience that aspire frictionless, immediate and hyper-personalized experiences, that require new channels, prepared to continuously keep up with new technologies, demands and expectations. A key role has been played by Neo-banks in setting the pace for this new digital panacea.
This is also the unique opportunity for banks to re-skill their workforce into a new mindset, one that puts customers first, empowers employees to be continuously measuring performance and improving the way they work (rather than replacing them with bots), and adopting lean and agile principles.
This journey has already started, and it’s not only startups that are already on track to disintermediate banks from their clients and customers, there’s Digital giants in the race too…
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