# Open Finance and Smart Ecosystems Won’t Wait for Banks
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-08-31
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: Unlocking the Potential of Open Banking and Smart Ecosystems
Meta Description: Discover how the banking industry is adapting to the changing landscape of Open Finance and Smart Ecosystems, with insights on the potential for growth and the
URL: https://financedigest.com/open-finance-and-smart-ecosystems-wont-wait-for-bankshtml

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_By_ **_Frank Saavedra-Lim,_** _Senior Partner at Teradata_

One of the greatest business visionaries of recent times, former CEO Andy Grove of Intel, believed that “only the paranoid survive” in the context of relentless innovation. Part of Intel’s great success was anticipating and meeting market demand, especially when it came to chip design. The [survival sentiment is one that clearly applies to Open Banking](https://www.financedigest.com/the-survival-of-the-banking-industry.html "THE SURVIVAL OF THE BANKING INDUSTRY") – a reality that rewards institutions competing to remain relevant. There are rumblings that [Open Finance](https://home.kpmg/xx/en/home/insights/2020/03/engaging-with-open-finance.html) and Smart Ecosystems are on their way. But it’s most important to understand how a banking institution needs to orient itself in this new [playing field](https://www.financedigest.com/using-agility-to-resist-economic-instability-and-level-the-playing-field.html "Using agility to resist economic instability and level the playing field") and its potential role in the evolution of the new smart financial ecosystem. In Smart Ecosystems, the holy grail is about finding perpetual inspiration for innovation that drives sustainable customer loyalty.

[Open Finance is not waiting on any banks](https://www.financedigest.com/open-data-represents-the-biggest-challenge-to-banks-in-a-generation.html "Open data represents the biggest challenge to banks in a generation"). [Banks intentionally define their place in the new playing field within ecosystems](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"). Some institutions are taking core [banking activities — such as account](https://www.financedigest.com/are-banks-ready-for-the-new-accountability-regime-in-2016.html "ARE BANKS READY FOR THE NEW ACCOUNTABILITY REGIME IN 2016?") opening, credit decisioning and pricing through APIs — and making them available to their ecosystem partners. Others are acting as the face for their [ecosystem retail partners](https://www.financedigest.com/volkswagen-to-partner-on-indonesia-ev-battery-ecosystem-minister.html "Volkswagen to partner on Indonesia EV battery ecosystem -minister"). The bits of the Open Finance evolution observed so far suggest where [banking activities are finding a new life outside the bank, becoming banking services or financial](https://www.financedigest.com/financial-crime-is-the-chink-in-the-banks-armour.html "Financial crime is the chink in the banks’ armour") transaction mechanisms that can be called on by ecosystem partners. It’s also clear [banks have a lot to offer](https://www.financedigest.com/first-abu-dhabi-bank-reiterates-not-eyeing-offer-for-standard-chartered.html "First Abu Dhabi Bank reiterates not eyeing offer for Standard Chartered") – beginning with the integrity of handling customer data that comes with a heavily regulated industry. A recent [survey](https://www.alliedmarketresearch.com/open-banking-market) by _Allied Market Research_ confirms expectations for material growth in the commercialisation of banking coming in the form of Open Banking or more broadly Open Finance services, stating, **_“_** Open Banking Market Size to Reach $43.15 Billion, Globally, by 2026 at 24.4% CAGR”.

To lead or not to lead is the question when it comes to Smart Ecosystems. The biggest banks can clearly take the lead and that is exemplified by [Citi](https://www.finextra.com/newsarticle/37181/citi-builds-fintech-marketplace) and [Lloyds Bank](https://www.pymnts.com/news/payment-methods/2021/lloyds-bank-brands-can-use-mastercards-open-banking-connect/). But there’s a lot more to consider and other [opportunities for a bank](https://www.financedigest.com/uk-retail-banks-is-irrelevance-curtailing-opportunity.html "UK Retail Banks: Is Irrelevance Curtailing Opportunity?") to define its role. Banks could naturally lead the [way forward as stewards of an ecosystem’s data platform](https://www.financedigest.com/make-way-for-the-rise-of-the-finance-super-apps-consolidation-of-financial-digitisation-tools-platforms.html "Make way for the rise of the Finance Super Apps – Consolidation of Financial Digitisation Tools & Platforms"). It is arguably the best partner equipped to offer valuable insight to its partners – beginning with a [customer’s purchasing](https://www.financedigest.com/britains-nationwide-curbs-cryptocurrency-purchases-by-customers.html "Britain’s Nationwide curbs cryptocurrency purchases by customers") potential.

In the quest for loyalty, it’s every ecosystem partner’s job to delight customers – sometimes many of them are involved in a single transaction. But to be smart, ecosystems need sensory capabilities through [data and analytics](https://www.financedigest.com/data-analytics-scenario-planning-and-the-finance-department.html "Data analytics, scenario planning, and the finance department") that enable them to predict, design and offer services to customers at their critical moments of need. This [intelligence is what informs the new financial frontier that lies at the extreme opposite of today’s static banking](https://www.financedigest.com/artificial-intelligence-in-banking-magazine.html "Artificial Intelligence in Banking Magazine") products. It is a continuum of financial services, micropayments, debt conversions, payment mechanisms, liquidity solutions and yet to be invented forms of “value storage and transfer.” And it is by recognising this fundamental organising principle that ecosystem participants [continually innovate offerings to meet](https://www.financedigest.com/despite-return-to-work-virtual-meetings-will-continue-to-disrupt-business-as-usual-in-finance.html "Despite Return to Work, Virtual Meetings Will Continue to Disrupt Business as Usual in Finance") evolving customer needs. Consistent, flawlessly executed, personalised [services that accrete to a customer’s](https://www.financedigest.com/id-fraud-is-on-the-rise-can-financial-services-do-more-to-protect-their-customers.html "ID fraud is on the rise: can financial services do more to protect their customers?") quality of life yield the highest likelihood of achieving customer loyalty.

Through covering similar topics, we have unveiled the inner workings of an unstoppable and accelerating transformation in [financial services](https://www.financedigest.com/how-financial-services-are-overhauling-security-to-defend-against-spoofing-scams.html "How financial services are overhauling security to defend against spoofing scams"). One that leverages customers’ [needs as inspiration for personalised service](https://www.financedigest.com/top-5-seo-services-you-need-to-succeed-in-2022.html "Top 5 SEO Services You Need To Succeed In 2022") design and delivery. Underpinning it all is a solid data and analytics foundation [transforming](https://www.financedigest.com/how-data-governance-as-a-service-can-transform-the-financial-sector.html "How Data Governance-as-a-Service can transform the financial sector") data into insights effecting smart decisioning. The entry of non-traditional players and inclusion of other [industries through Open Finance will deliver more modernised financial services](https://www.financedigest.com/73-of-employees-in-the-banking-and-financial-services-industries-are-looking-for-better-physical-and-mental-wellbeing-support-in-the-workplace.html "73% of employees in the banking and financial services industries are looking for better physical and mental wellbeing support in the workplace") and the timing couldn’t be better.

Finally, institutions should recognise the catalytic role COVID has played in pushing the industry along [toward a more permanent commitment to a digital](https://www.financedigest.com/the-journey-towards-a-digital-bank-five-major-stages-to-successful-banking-digitalisation.html "THE JOURNEY TOWARDS A DIGITAL BANK – FIVE MAJOR STAGES TO SUCCESSFUL BANKING DIGITALISATION") world. There are banks taking action to escape the gravitational pull of traditional banking by spinning off 100% [digital banks](https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/brazil-s-bradesco-spins-off-digital-bank-amid-intensifying-competition-60186937), while Big Tech has proven its ability to disintermediate primary banking customer relationships and [profitable niches](https://www.brookings.edu/research/chinas-digital-payments-revolution/). Both [avant-garde](https://newsroom.paypal-corp.com/2020-10-21-PayPal-Launches-New-Service-Enabling-Users-to-Buy-Hold-and-Sell-Cryptocurrency) (e.g., PayPal) and established financial firms (e.g., BNY Mellon) have swung over to accept [crypto currencies](https://www.cnbc.com/2021/02/11/bny-mellon-to-offer-bitcoin-services-a-validation-of-crypto-from-a-key-bank-in-the-financial-system.html), taking a step toward the modernisation of cross-border financial transactions. In this dynamic reordering of the financial universe, [time is not a bank’s](https://www.financedigest.com/stock-pickers-reckon-its-time-to-move-on-from-central-banks.html "Stock pickers reckon it’s time to move on from central banks") best friend.

_“The person who is the star of the previous era is often the last one to adapt to change, the last one to [yield to logic of a strategic inflection point and tends to fall](https://www.financedigest.com/stocks-climb-yields-fall-with-dollar-on-inflation-data.html "Stocks climb, yields fall with dollar on inflation data") harder than most. The strategic inflection point is the time to wake up and listen.”_

_— Andy Grove_


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