Despite what many people think, the biggest winners in open banking are likely to be the incumbent banks.
The reasons lie in the explanation of why the others will ultimately fail. Banks are regulated; they have millions of customers, and while those customers might not be thrilled by them and may not completely trust them, banks still have residual trust that alternatives to banks lack.
The critical success factor for open banking is trust, and a key driver to building trust is ensuring that data is not lost or stolen, and that it is also only used for the purposes that customers "allow." Consent thus becomes the key service enabler for trust.
Open banking can be seen as yet another compliance issue, or as a genuinely great opportunity for banks to service their customers better. If banks seize the moment, not only can they stave off the threat of new entrants, they can deepen their relationships with their existing customers and use open banking as a way of acquiring new customers and generating new revenue streams.
If banks take the opportunity to act as third-party payment providers themselves, they will finally be able to understand their customers’ behavior with other competitive banks, and indeed other types of organizations, in a new world of data sharing.
In short, banks have the opportunity to transform from being the trusted custodians of our money to being the trusted custodians of our data.
