The current discussion on open banking is set for an upgrade.
As the curtains came down on the 2017 Global Open Banking Hackathon, it became obvious that innovators are moving beyond creating a “bank as a platform.” Even less traction was found in creating “marketplaces.” And finally, “open banking,” as it relates to allowing third parties to leverage banking data, was merely tool in the quest for something much bigger.
Instead, the full force of innovation was applied towards creating open customer experience ecosystems, with traditional banking being a small—but crucial—component. To me, this was an indicator of how democratized financial information is expected to become; a trend that is also being driven in all markets—either through regulation, or through competition from new entrants. Another way to say it is that traditional products and services are considered very fungible on the one hand, but can also be a stepping stone to comprehensive customer experiences on the other hand.
This was evident as the top accolades of the 2017 Global Open Banking Hackathon went to:
- An advice platform and ecosystem for budget planning and services (around travel)
- A blockchain and AI-based retail engagement platform
- A blockchain-based mortgage ecosystem
- An investment and funding solution for startups and businesses
- A solution focused on solving the talent gap in the industry.
There can only be a few “winners,” and many other solutions were winners in their own right. These include the one that wants to get banking closer to the next generation of customers (our children), a robo-advisor that is also a life concierge, a blazing-fast microlending platform with a difference, a dual credit and savings solution for farmers, a new immersive experience based on virtual reality, and so on, in different niches. Congratulations to them all! They all saw a problem, or friction, and developed a way to solve it.
It’s interesting to note that none of these solutions started out by treating financial data as a transactional element in their overall business process. Instead, they put banking right in the middle as an orchestrator and an owner of their innovations. That’s very different from the bank’s currently planned role of being a platform that provides data and facilitates various parties (under the current Open Banking debate).
Of course, each of these solutions can also pivot on a dime, follow the current contours and thinking around open banking, and still be very successful. But, they have also set the stage yet again for a different level of conversation. That’s because each solution re-emphasized the fact that while strategists are looking inside-out at what banking can be, innovators are looking at this space from the outside-in. It points to a very interesting progression of the current debate— how will customer experience ecosystems result in different definitions of the bank—with business lines that are far removed from those of today? This question is also perfectly in sync with the trend of crumbling industry boundaries and disruption we see all around us today. It’s a dramatic change in conversation which must find place in the strategy rooms. In short—how can we create transactions from experiences, versus just creating great experiences for transactions? In my view, the question of the future of banking should be answered through the lens of reinvention, not just readjustment.