How do small banks and FIs compete with not only bigger banks but also Big Techs like Google, Apple, Amazon getting into Financial Services?
Or, How do Smaller Startup/ New Fintech/ Early stage start-up compete with not only established unicorns or soonicorns such as PhonePe, PayTM but also Big Techs?
The answer lies somewhere with Open Banking providing level playing field for smaller players in the financial services segment.
Open Banking able to provide level playing field opportunity through helping an organization by
…taking banking services to the customer wherever he /she is and whatever he/she is doing
… innovating products & services in collaboration with Fintech/partners
… Enable reduction in sales efforts and improve efficiency
… Build Platform for Customer Information & Banking Services for consumption
So the big question is how to get there?
For Banks, the approach should be
- Build Open Banking Strategy and Roadmap for an organization:
- Set your business context,
- visualize roadmap,
- align open banking initiatives and
- execute and measure
- Build Business models- Define your focus areas be it acquisition, expansion or cross-sell; Select business service; pick your customer segments be it SME, retail, young millennial; define cost structure/ revenue streams
- Setup platform to support Open Banking framework: which would include API Management and Gateway to connect with the outside world
- Select Right Partner aligned with business objectives and go for business expansion
- Setup Governance framework with policies, contractual arrangement, risk management framework
- Go for agility and speed to onboard right mindset partner and engage for a faster go-to-market approach
For Startups, the approach should be
- Build Open Banking Strategy and Roadmap for an organization: Set your business context, visualize roadmap, align open banking initiatives and execute
- Focus on the right business solution for your select segment catering to the business needs of the customer
- Pick up the right customer segment and positioning of solution
- Next is key to map his banking needs and structure solution to address banking needs in line with his business: Banking is always the secondary need for the customer while his main needs are managing his business or day to day life. So it is critical to embed banking into your solution strategically
- Setup technology architecture in robust fashion to provide confidence to trusted banking partner to consume banking services and bring agility in integration
- Build innovation to continue evolving your solution while continue to push more and more banking services over your platform: Analytics engine and strong capability to decipher both data from your solution usage and banking transactions would be critical to building a strong and sustainable business model
You may be on your path to building next Neo Bank or Open Bank over your platform
Shashank Shekhar
Head of Consulting, The Digital Fifth