# Open banking demands foresight, but indicates robust new revenue streams:World Retail Banking Report 2017
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2017-06-21
Category: BANKING
Category URL: https://financedigest.com/category/banking
Meta Title: Banks' Evolution into Open Banking: Risks and
Meta Description: Learn how banks can embrace Open Banking to avoid disintermediation. Find out strategies and insights from the World Retail Banking Report 2017.
URL: https://financedigest.com/open-banking-demands-foresight-but-indicates-robust-new-revenue-streamsworld-retail-banking-report-2017html

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**_Banks must embrace and lead the evolution into Open Bankingor risk disintermediation_**

**The Open Banking [\[1\]](#_ftn1) evolution continues to unfold. Banks risk disintermediation [\[2\]](#_ftn2) if they do not carefully 1) choose their customer-interaction business model role, and 2) use application programming interfaces (APIs) [\[3\]](#_ftn3), according to the** [**World Retail Banking Report 2017**](http://www.worldretailbankingreport.com/) **(WRBR 2017) from** [**Capgemini**](https://www.capgemini.com) **and Efma. Banks, in collaboration with FinTechs, can lead the Open Banking movement by offering their customer bases innovative and personalized services that create new revenue streams and provide more value to customers.**

_“FinTechs are now earning higher positive customer experience scores than traditional banks, and banks are openly seeking to collaborate with FinTechs. [Open Banking offers banks an opportunity to retain and grow their customer base as they add the varied services of third](https://www.financedigest.com/volvo-car-considers-opening-third-plant-in-europe.html "Volvo Car considers opening third plant in Europe") parties to personalize and customize products and services. For banks that don’t think strategically and establish a role in Open Banking, there is a chance they will be disintermediated from their customers,” said Anirban Bose, [Global Head](https://www.financedigest.com/global-growth-headed-down-as-inflation-surge-to-endure.html "Global growth headed down as inflation surge to endure") of Banking and Capital Markets, Capgemini. “It is imperative that [banks consider business](https://www.financedigest.com/two-speed-economy-in-sweden-central-bank-business-survey-shows.html "Two-speed economy in Sweden, central bank business survey shows") transformation approaches now, to establish and solidify their long-term base in Open Banking.”_

**APIs Offer a Pathway to Open** [Banking Transformation](https://www.financedigest.com/digital-transformation-in-banking.html "Digital transformation in banking")

The WRBR 2017 details how APIs offer a pathway [toward Open Banking](https://www.financedigest.com/deutsche-banks-rollercoaster-ride-towards-more-stability.html "Deutsche Bank’s rollercoaster ride towards more stability"), where FinTechs and financial institutions collaborate rather than compete to create customer-centric solutions. Though APIs raise some security and privacy concerns, they are seen as crucial in allowing banks to take advantage of FinTech ingenuity without having to make major changes to existing infrastructures.

“The most successful [banks will use open APIs to generate new customer insights](https://www.financedigest.com/insight-into-tomorrows-retail-banking-customers.html "INSIGHT INTO TOMORROW’S RETAIL BANKING CUSTOMERS") and revenue streams, while also improving customer experience,” said Vincent Bastid, Secretary General, Efma. “Many banks currently use APIs internally to improve [information flow between legacy systems](https://www.financedigest.com/the-cardiovascular-information-systems-market-is-expected-to-grow-on-a-persistent-note-in-the-future.html "The Cardiovascular Information Systems Market is expected to grow on a persistent note in the future"). In fact, we are already seeing early adopter banks asserting their role in Open Banking by proactively making their systems and [data](https://www.financedigest.com/asia-shares-edge-higher-wary-of-us-bank-data.html "Asia shares edge higher, wary of US bank data") available to third parties and creating new revenue streams.”

**Collaboration Is** [Key to the Future of Open Banking](https://www.financedigest.com/russia-bans-western-investors-from-selling-banking-key-energy-stakes.html "Russia bans Western investors from selling banking, key energy stakes")

Exactly how the evolution toward Open Banking will play out is far from clear. A majority of FinTech respondents (53.8 percent) and banks (43.5 percent) envision a [future in which banks](https://www.financedigest.com/what-is-the-future-of-banking-in-the-metaverse.html "What is the future of banking in the metaverse?") and FinTechs work together to build cross-industry platforms with bundled, complementary services that benefit customers. A less likely but still plausible outcome, is that banks will continue to provide [products and services but leave distribution to FinTechs](https://www.financedigest.com/why-make-fintech-products-accessible-for-all.html "Why Make Fintech Products Accessible For All?"), BigTech, or other new open platforms. This has the potential to lower customer acquisition costs but raises issues related to disintermediation branding and customer ownership. Nearly half (47.8 percent) of FinTechs predict this future [scenario compared to only 28.8 percent of banks](https://www.financedigest.com/how-bank-cisos-can-respond-to-a-digital-hostage-scenario.html "How Bank CISOs Can Respond to a Digital Hostage Scenario").

This [year’s WRBR also quantified the robust appetite for closer partnerships between FinTechs](https://www.financedigest.com/why-well-look-back-on-2022-as-a-defining-year-for-fintech.html "Why we’ll look back on 2022 as a defining year for fintech") and banks going forward. The vast majority of banks (91.3 percent) and most FinTechs (75.3 percent) say they expect to collaborate in the future, with banks providing access to their broad resources, experience and expertise, and FinTechs offering agility, [speed to market](https://www.financedigest.com/vehicle-speed-monitoring-system-market-key-players-swot-analysis-key-indicators-and-forecast-to-2026.html "Vehicle Speed Monitoring System Market Key Players, SWOT Analysis, Key Indicators and Forecast to 2026") and a fresh take on customer-centricity. By working together and taking advantage of APIs, banks and FinTechs can leverage their complementary strengths, enhancing the customer experience much more than each entity could do on its own.

“We work with clients every day who tell us that they are looking to better understand the [roles they should play as these new business models take shape; everything from the investment necessary to how to engage with these new players](https://www.financedigest.com/the-role-of-fintech-in-shaping-innovative-future.html "The Role of Fintech in Shaping Innovative Future"). Many understand that Open [Banking is the new normal](https://www.financedigest.com/how-banks-can-triumph-in-the-new-normal.html "HOW BANKS CAN TRIUMPH IN THE ‘NEW NORMAL’"), but they are still unclear about how to proceed.” said Bose. “We are helping our clients see first-hand just how Open Banking opportunities are [improving their product](https://www.financedigest.com/demand-for-meatless-products-and-vegetable-proteins-is-expected-to-improve-nutritional-yeast-market-sale.html "Demand For Meatless Products And Vegetable Proteins Is Expected To Improve Nutritional Yeast Market Sale") portfolio and distribution networks, as well as creating new revenue streams, while minimizing the risk of customer disintermediation.”

**FinTechs [Earning Higher](https://www.financedigest.com/italian-hearing-aid-maker-amplifon-expects-higher-2023-earnings.html "Italian hearing aid maker Amplifon expects higher 2023 earnings") Marks in Customer Experience and Collaboration is Key**

[FinTech companies have done a good job of cracking the code on what customers](https://www.financedigest.com/how-fintech-aids-financial-inclusion-and-helps-customers-through-crises.html "How Fintech aids financial inclusion and helps customers through crises") want, which presents a threat to bank-customer relationships, the report found. BigTech companies like Amazon, Apple and Facebook are conditioning customers to expect more from their banks and the experience they provide. Because of this, customers are embracing FinTechs, with 40.3 percent [saying they deliver a positive](https://www.financedigest.com/go-for-it-think-positive-believe-in-yourself-and-do-what-you-love-says-dawn-elliott-of-sew-confident-chorley.html "“Go for it, think positive, believe in yourself and do what you love” says Dawn Elliott of Sew Confident Chorley") experience, compared to 37.1 percent who say banks do. FinTechs are most popular in [North America](https://www.financedigest.com/north-america-to-emerge-as-largest-market-for-softball-equipment-through-2026.html "North America to Emerge as Largest Market for Softball Equipment Through 2026"),

where 57.8 percent of customers say they offer a positive experience, compared to 49.5 percent who cite banks. Globally, customers who are young and tech-savvy are the most likely to turn to FinTechs.

APIs make it easier to create [innovative and valuable customer experiences by pooling the collective tribal knowledge of banks and FinTechs](https://www.financedigest.com/the-future-of-fintech-startups-driving-innovation-and-investment.html "The Future of Fintech Startups: Driving Innovation and Investment"). Challenges to Open Banking [development include the need for governance and consistent technology](https://www.financedigest.com/research-and-technological-innovations-to-bolster-developments-in-polycarbonate-resins-market.html "Research and Technological Innovations to Bolster Developments in Polycarbonate Resins Market") standards. Additionally, banks must determine their role in Open Banking, how to effectively personalize customer data, and how to prepare for new [revenue opportunities](https://www.financedigest.com/uv-disinfection-equipment-market-opportunities-demand-and-revenue-forecast-2025-tmr-study.html "UV Disinfection Equipment Market Opportunities, Demand and Revenue Forecast 2025 – TMR Study").

**The World [Retail Banking](https://www.financedigest.com/how-effective-talent-management-could-disrupt-the-retail-banking-sector.html "HOW EFFECTIVE TALENT MANAGEMENT COULD DISRUPT THE RETAIL BANKING SECTOR") Report 2017 Methodology**

This year’s World [Retail Banking Report explores how APIs foster business and technology](https://www.financedigest.com/transforming-the-retail-banking-ecosystem-its-all-about-technological-innovation.html "TRANSFORMING THE RETAIL BANKING ECOSYSTEM: IT’S ALL ABOUT TECHNOLOGICAL INNOVATION") outcomes that enable productive collaboration among diverse stakeholders. It features data from a global survey and interviews with [senior executives from 126 banks](https://www.financedigest.com/societe-generale-says-two-senior-executives-to-leave-bank.html "Societe Generale says two senior executives to leave bank") and FinTechs.

[\[1\]](#_ftnref1) Open Banking enables third parties to develop new products and services through use of APIs.

[\[2\]](#_ftnref2) Disintermediation is the elimination of financial intermediaries banks, brokers, financial institutions) between the suppliers of funds (savers/investors) and the users of the funds (borrowers/investees.)

[\[3\]](#_ftnref3) Application Programming Interfaces (APIs) facilitate information flow and collaboration between the parties of a connected technology ecosystem.


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