In a recent interview for IBS Intelligence’s Journal, Software Group’s CEO Kalin Radev discussed the key trends in open banking, which have helped banks awaken to the idea of becoming ecosystem players.
There has been significant growth in average annual open banking spending of up to 29% in 2020 in Europe. A median investment budget of €50-€100 million per institution is a sure sign that banks expect major returns from open banking in the coming years (Tink & YouGov research).
Radev said: “Some of the key recent trends we are observing are the even stronger actions by legislators to standardise open banking processes and establish regulations for FinTechs; the leveraging of open banking to move forward the cashless society agenda through instant payments; the entrance of even more new players in the financial sector, like telecoms; and, of course, the desire of banks to become ecosystem players via new business models.”
“The most common challenge to the latter is legacy infrastructure. Smartly, many banks are utilising fast-to-market remedies.
For example, one of Software Group’s clients, a top bank, used our platform to achieve system compatibility, and decompose their landscape into reusable microservices with a view of centralising ID Management and Strong Customer Authentication (SCA) across their ecosystem of customers, employees, agents and partners.”
Kalin Radev also discussed the challenges for banks, presented by FinTechs and BigTech. According to him, banks have hard-to-replicate competitive advantages, such as high consumer trust, rich offerings, partner ecosystem, regulatory compliance.
“These factors provide a solid ground for banks to compete and envision their future in different strategic directions, such as becoming:
- a Digital Leader
- an Ecosystem Champion cooperating with both FinTechs and BigTechs
- a Niche Player
- a ‘Banking as a Service’ (BaaS) provider, etc.”
Also:
How has the impact of Covid-19 affected the drive to digital banking?
What kind of digital banking experience will customers require?
What pain points need to be addressed in the customer journey?
Read the full interview in the IBS Journal article.
