The biggest #threat for the banking sector is not #fintechs. No, according to a recent report by McKinsey, that would be non-banking companies such as #Amazon and #Alibaba. The report refers to these companies as “platform companies” and calls them the “new heavyweight competitor(s) in town,” for the banking sector. Based on information gathered from […]
Bank Innovation
EXCLUSIVE—The growth of person-to-person payment network #Zelle has been a key topic for #banks and additional financial institutions since the service officially rolled out a #year ago. As many companies reported their third quarter earnings for 2017, Zelle has been a reccurring topic not only at banks, but at payments companies, and other financial service […]
Bank Innovation
Bank payment specialists starting to use #Ripple #blockchain make clear to their own executives and regulators that this has nothing to do with #bitcoin.
Financial Technology
EXCLUSIVE – October saw a plethora of new #credit cards. From traditional #banks such as HSBC releasing its Premier World Elite Mastercard Credit #Card, to ride-share app Uber’s first foray into the market, it seems like everyone is interested in launching a new credit card promising to deliver what the other doesn’t. The distinction each […]
Bank Innovation
The #developing #world has many innovative #mobile money apps but most operate on a closed loop, limiting their value. The #Gates #Foundation has launched a #platform to facilitate connections for mobile money users to #banks, other mobile platforms and retail. It is avaialbe free through BitHub.
Financial Technology
#Open #banking—where #banks expose their data, functions and services to an ecosystem of customers, employees, third-party developers and vendors—has been hotly anticipated in Europe. We know almost US$ 1 billion was invested in PSD2-enabled services in 2016, up 200 percent from the year before¹.
Of course, some of this investment came from banks. But much of it originated from the group of voracious digital competitors circling banks’ traditional territory. That’s no surprise. The drive towards open banking gives them a direct line into a potentially lucrative market. And, crucially, it’s a market where they’re well placed to deliver the flexible, personalized experiences consumers demand.
Now, with PSD2 implementation across Europe just a few months away, new research from Accenture points to a major #opportunity for UK banks: We’ve found that more than two-thirds (69 percent) of UK consumers say they won’t share their personal financial data with third-party providers.
Based on this survey of over 2,000 consumers, it’s clear that online retailers, tech firms and social-media players face an uphill battle to convince consumers to allow them access to their financial data. Especially since over half of them say they’ll never change their banking habits and adopt open banking.
So why not? It all comes down to a lack of trust. Trust in online platforms and social-media companies as providers of payments services is low. We found most consumers would be unwilling to initiate a payment through an online platform (58 percent) or a social-media company (82 percent).
Fear of fraud is the primary factor. An overwhelming majority (85 percent) of consumers point to the risk of fraud as the biggest barrier to sharing bank account information with third-party providers. Data protection risks and increased potential for cyberattacks also feature highly.
By contrast, more than half of British consumers said they would trust only their own bank with their account information when seeking services like a better mortgage rate or savings account. This should be music to the ears of UK bank executives. Having won the trust of their customers over a period of many years, now is the time to build on that heritage to secure crucial early advantage in open banking.
The overriding priority? Be open to being open. That starts with the culture. Banks have to encourage a cultural shift from the outset. Everyone from the c-suite downwards needs to be involved in the conversation about open banking. They need to see clearly how it can help the bank achieve its core objectives: gains in revenue growth, cost reduction and talent management. The bottom line? Open banking has the potential to be a key initiative within every bank’s digital transformation program. As such it should be high on the agenda. Take a closer look.
But there’s a caveat: While we found banks can and should move fast to up their digital game and capitalize on the advantage they have in open banking, there’s a new generation of consumers coming through—and they feel very differently. Younger consumers (aged 37 or under) are more willing to trust non-traditional service providers.
One-third of Gen Z’ers say they’ll be likely to use open banking instead of usual payment methods. That’s in stark contrast to the only six percent of baby boomers who feel the same way. The same generational split is obvious in another area: Forty-two percent of millennials and 52 percent of Gen Z’ers say they’ll give online retailers permission to initiate payments directly from their bank accounts using apps/websites.
While this shows clearly where retailers need to focus their efforts in creating new payment experiences, in-store and online, banks themselves need to take notice if they’re to attract and retain business from younger consumers. That means no let-up in investments in social media, wearables and secure but frictionless customer authentication.
Let us know what you think. Thanks for reading.
The post The open banking opportunity appeared first on Accenture Banking Blog.
#Banks should find some appropriate, low-risk project and deploy #blockchain, perhaps in parallel with existing operations, say IBM and CLS. They can’d continue proofs of concept indefinitely if they want the benefits blockchain offers.
Financial Technology
EXCLUSIVE—If #banks want to remain a large, foundational part of the future financial system, they’re going to have to start working a bit harder on the open banking ecosystem, Marten Nelson, co-founder and VP of marketing for Token, told Bank Innovation. “Banks have to play on both sides as well, they do need to develop […]
Bank Innovation
Seneca, the 1st-century Roman statesman, didn’t believe in luck. For him, what others called luck was when opportunity met preparation. Hopefully there aren’t many bank CEOs relying on luck to get them through their digital transformations. The opportunity in front of them is becoming clearer—to thrive in a more open and competitive #banking industry by being customer-centric and agile—but what of the preparation? What does a Future-Ready Bank look like? One big obstacle that #banks need to tackle is their cost base; particularly, seeing and understanding “#black box” #costs and then assigning ownership of them in ways that provide competitive advantage.
Regardless of how committed a management team is to becoming Future-Ready, in the words of Muhammad Ali, “The hands can’t hit what the eyes can&8217;t see.”
The black box refers to the complex and opaque costs, functions, processes and activities in banks that are not directly related to any single line of business. Comprising some 65 percent of a bank’s cost base, the complexity, centralisation, disparate data and non-accountability of the black box lands a knockout punch to bank profitability and evolution.
Banks can gain visibility into black box costs by bringing together data from the General Ledger, HR and AP systems, invoices, and other data sources to create a rich dataset that categorises costs in a meaningful way and clarifies cost ownership. It provides management with a front-to-back value chain view of the organisation, costs and headcounts tied directly to business line and revenue base.
Once banks have a clear view on this hefty share of their costs, they can assign responsibility for most, if not all of the cost base. Bank leadership can make such ownership concrete by creating a framework for rewarding managers based on successful cost management. Arguably, clarifying cost ownership represents the greatest shift in improving a bank’s ability to manage itself.
With visibility in hand and ownership in place, banks are positioned to better re-enact zero-based approaches to get off the traditional ropes and transform to the “new”. They can challenge not only the cost, but also if the activity needs to be done in the first place—informed by actionable, granular-level data analysis on how cost, risk and capital interact, to then purge unwarranted activities.
Though not a new concept, zero-based budgeting is becoming more critical as rates and yield curves rise, compliance costs increase and new agile, digital-native contenders emerge. Rather than being boxed into a cost corner, banks can fundamentally rethink their path to efficiency, better their cost-income ratios and, ultimately, their digital readiness. It requires banks to establish a culture in which visibility, transparency, simplicity and ownership of costs are the goals of the organisation. With the right preparation, banks will be able to make their own luck in a digital future.
To learn more, I invite you to read our report: Get fit | Shining a light into the black box
The post Target black box costs for zero-based, Future-Ready Banking appeared first on Accenture Banking Blog.
EXCLUSIVE—Preventing fraud is an ongoing battle, and Mastercard wants to make it a little easier for card issuers with the launch of its #Early Fraud #Detection #System. The system, announced by the payment processor today, will allow FIs and other card issuers to create a greater net of protection for card customers. It does so […]
Bank Innovation
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