the opportunities of Open Banking

For the consumer, in gaining more access to your own banking details and information about banking products you become much better informed about which savings, loan schemes and other financial products which are the perfect fit with your personal circumstances. This allows you to grow your savings and achieve your life goals more easily. Giving you access to your own transaction data is called 'Open banking'. Thanks to Open Banking there's a world of new opportunities for you as a consumer. New opportunities to completely transform the way people interact with their banking systems. How do you use these opportunities? And how do you, as a financial services provider, remain competitive in a rapidly changing banking landscape? Daan Noordzij, Solution Architect at We are you, advises.

four principles

In order to remain competitive, existing banks and other financial service providers will have to embrace the principles of open banking. In summary, these are:

  • The focus has to be on the customer
  • Mutual competition must be encouraged
  • There must be more opportunities for new entrants, new initiatives
  • Banking must be more efficient and more fair

skills for open banking

No specialist developer skills are needed to exploit the opportunities presented by open banking. According to Daan, only the approach is different, legislation; the differences in regulations and security standards place their mark on your development. 'For banks, that pressure has always been there. This is precisely why we concentrated on the unique requirements for banks and insurers at our Amsterdam location.' Daan explains. 'The way that banks open up information to the consumer is changing. Open banking is therefore both an option for parties that have experience with the financial sector and for parties that have a lot of knowledge and experience of customer interaction.'

banking in 2024

When we ask Daan about what banking will look like in 2024 he says: 'Imagine a seamless experience. Your bank offers you insight into your full financial situation in your daily life as well as all financial services, additional services, advice and it contributes to your financial well-being. Based on a smart two-way integration, the sometimes cumbersome payment process at your favourite shops, restaurants and petrol stations is completely eliminated. You simply walk out without a payment transaction. At every important life events such as travel, family expansion, relocation, etc. your bank is a partner, a support. The focus is completely on what you need as a customer.

new business models

It is already noticeable that open banking encourages new entrants and new business models. For example, innovative initiatives have emerged from advanced analytics on movements in the investment markets:

  • Predictive algorithms for consumer share trading based on your own transaction data around shares, market movements or the influence of the press on the value of shares
  • Advice on investments based on the chosen risk profile and goal of the consumer

These new initiatives ensure that the ultimate goal of a consumer can be reached sooner. He or she can ensure that a child or grandchild can study more comfortably, to enable the purchase of a home or pay off a mortgage early or to take early retirement.

Daan Noordzij licht open banking toe.

open banking trends

According to Daan, there are a number of trends emerging in the open banking initiatives. First of all, open banking initiatives really put the needs of consumers first. Consumers expect immediate service and an excellent customer experience. "If you do not offer that, you will not be able to survive as a new provider.” stresses Daan. "You can not count on the loyalty that large banks still experience from their customers."

Secondly, open banking initiatives operate on a more personal level, both in their remuneration and in their communication. Personal loyalty systems that encourage peer-to-peer recommendations are more common. A lot of data is collected to enable personal interaction. This 'big data' is used to improve interaction, to increase brand loyalty, to encourage repeat customers and to thus earn income.

Third is the digitization and the growing gamification of financial services. The combination of open banking via APIs and other solutions in the market delivers fresh interactions. Think of chat-bots, cross-device payment options and secondary financial services. Secondary financial services can vary widely and yet can still be accessed via the banking app. Open banking makes banking more playful and easier.

banking becomes playful

remain competitive

If you want to be competitive within the open banking landscape, you have to enable your customers to use the large amount of available data. Legislation such as the PSD2 has long dictated that banks must make transaction data available to their customers. As an existing bank you have to start thinking about how you can use this data for the well-being of your customer how do you make that switch from transaction enabler to a financial partner that helps customers to attain financial security and achieve their goals?

At present there has not yet been an open banking initiative that has been able to knock the big banks off the top spot. Daan emphasizes that this is a reason to investigate the opportunities and possibilities offered by open banking: "Often the first mover in a new development is the one that remains best equipped to reach customers. The business who knows how to use the benefits of open banking in the right way and offers the greatest added value for the customer can dominate the landscape." This added value can also be found when combining financial services with other (retail) services. It really pays to think about daily financial (in) conveniences and finances in the broader sense of the word right now.

whoever embraces open banking now can become market leader