Widening the services net
Similar to retail, the benefits of open banking and IoT data can create opportunities in corporate banking with a relationship aggregator for small- and medium-size enterprises. Such a relationship aggregator for corporates can create an ecosystem with access to multiple services for which they may not have previously considered at their existing bank.
Perhaps instead of a home assistant, it is an “office assistant." A central aggregating hub, fused with transactional data and actual financials, can advise companies on the best time to refinance a loan by monitoring favorable interest rates. Or access to external data can improve supply-chain management by analyzing shipping costs of clients' competitors to advise on market rates and when they may be overpaying.
In fact, Swoop is blazing a trail with services for small businesses. Customers have the ability to compare and switch current accounts and easily choose among 400 lenders, including peer-to-peer (P2P) platforms such as Funding Circle and Growth Street, and can use APIs to integrate their accounts with accounting software like Xero. Swoop even integrates with the current account switching service to execute the move to another financial institution.
Truly embracing the benefits of opening banking in these types of ecosystem models will create real value for customers. Open banking has the potential to deliver on its initial promise by fusing banking and non-banking data in a connected ecosystem and applying innovative human-centric algorithms. This will deliver hyper-personalization, widen the services net, and ultimately make banking, open. Whether a fintech, a techfin, a challenger, or an established player drives this change is irrelevant because, after all, it is the innovative data wranglers that will decide the success of open banking.
The article was authored by Alex Bray, assistant vice-president, consumer banking, and Peter Heywood, digital partner, banking and capital markets, Genpact, and was first published by FinTech Futures on March 5, 2019.