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Open Banking Post Covid-19

It has been more than two months now since the pandemic impacted the world, and still there is no end to it. This pandemic is of nature whose effects will be seen over a period. The event has started seeing impact across life and business. COVID-19 has been slowing down both scale and speed.

Fintechs and startups communities are business segment which would be severely affected as this segment thrives on scale and speed based on the push from investors. Banks also finding difficult to sustain business models and struggle to maintain money flow going.

Open Banking is all about building business models through a partnership with the consumption of APIs for delivery of banking-as-a-service. Open banking has thrown up new business opportunities and led to innovation in the banking domain. This segment has also seen a push from government and regulations across the globe while it has been more of a business push in the Indian context. During and post COVID-19, there are good reasons to see a good spurt in business activities around open banking.

The partnership will be need of the hour: Going forward, businesses would like to build around the collaborative relationship. Banks will be more than open now to tie up across product segments to ensure continuity of business. Partnership with Fintechs would enable Banks to widespread their customer reach, delivery of bundled services, better support mechanism. Partnership based business would be more critical to small banks as a limitation on their standalone operations would be detrimental to business. At the same time, tie-ups with Fintechs would help them to tide over this period. Post-COVID, multi-dimensional relationships will be evolved to address the diversification of services and the concentration of risks.

Product innovation will be significant KPI: Pandemic of such nature has made everyone to rethink their business models and sustainability & efficacy of the delivery model. Customer choices are going through tremendous changes and be it, retail customers, or corporate users. In this condition, businesses have to continuously evolve themselves and make product realign fast to changing demands. The approach of Fail Fast and Fail Often will be more than ever critical. One would need to continuously assess the relevancy of products and services. The open banking model will enable both Banks & Fintechs to work together to rebuild the product and delivery model.

Bank will be moving towards platformification: Platform approach will provide much-needed flexibility and diversification to Banks. The platform will make Banks build a plug-and-play model to allow various participants to come together and create products & services for customers. Open Banking is key to platformification.

Cost optimization will be central to business: COVID-19 has almost dried up the cash flow and Fintechs, even banks finding it difficult to manage the business going through similar cash flow. There will be massive pressure on managing costs across business segments, including customer acquisition, operations, risk management, etc. The collaborative approach of Open Baking will help both Fintechs and Banks to share cost burden and optimize cash usage to build a sustainable business.

Undoubtedly, this is not an easy moment, but we will see silver lining sooner or later. Businesses have already started reinventing themselves and gearing up to speed up as more quickly as the atmosphere cleans up. Open Banking led business models will surely be one of the kick-starters.

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