Banks hold a record of much of what we spend, save, and borrow—from electricity bills and mortgage payments to our weekly spend on fuel and coffee. Now, some of that customer data is being shared with third parties in a global movement known as “open financial data” (sometimes referred to as “open banking.”) Roughly half a decade in the making, it’s unlocking a wave of digital financial innovation—and likely disruption.
Open financial data should be watched carefully. Consumers and small businesses want more choice, ease, and flexibility in how they manage their money. Open financial data provides new and distinct solutions that people find appealing. Much in the way that Google’s release of its map APIs data paved the way for ride-sharing and other location-based apps to build new propositions at pace, open finance has the potential to usher in a wave of innovative financial products and services few have yet to even consider.
Market participants, and particularly incumbent banks, need to grasp the magnitude of the change that is currently underway. It will be important to develop the agility to partner with a wide set of players and build innovative offerings that can serve customer needs in the context of their everyday lives. They must be prepared for a world in which the future of banking is truly “open.”