Innovation
Is Open Banking dead on arrival?
Here’s what Gen Y and Gen Z say about Open Banking. Spoiler: it's shocking.
On today’s topic, we’re gonna debunk Open Banking and why it well, straight-up “maybe” sucks:
Open Banking who?
The overall vision of Open Banking is noble — to improve competition, efficiency, and stimulate innovation.
But the approach is “little bit” one way and disadvantageous for banks, especially when facing data-driven competitors like Google, Facebook, or Amazon in a combination with FinTechs funded by venture capital.
As the Open Banking (OB) is here only since 2018, we’ve just come into a period of it learning about the shapes and colors of the market. But the stakes are high and the promises and expectations even higher.
Traditional banks understand that to better compete in the industry, they must develop their digital capabilities to avoid being canceled by new entrants with superior offerings and services.
In 2020, Open Banking has surpassed its first 1 million costumer mark worldwide
Is Open Banking even necessary? Well, not really.
The report written by the European Banking Association reveals that by adopting and deploying APIs, banks can significantly enhance their native services and offerings. However, these APIs can also create a threat for banks by opening doors to FinTech firms, who may leverage this data to extend their own offerings as well. And, it's not just them:
The Johny Bravo syndrome
Every single bank wants to be the perfect and unbeatable pillar while looking fine like Johnny Bravo, so what is the best way to impress their clients?
Simple, yet stupid solution: Just provide customer's data to third companies! And as a matter of fact, while we're at it, do it “free of charge” so only third parties can benefit from this technology. Bargain of the century, oh hell yeah.
DO NOT FALL FOR OPEN BANKING JOHNY BRAVO SYNDROME.
We’ve heard about the European Union’s PSD2 regulation that requires banks to share customer data with third parties. But does it make bank any added revenue? NOPE. Does Open Banking make your user experience (UX) better? Well, maybe. Not really, though.
At first, it might seem like a good idea, but are we sure that customers can embrace proclaimed advantages of interconnecting data aka APIs? Honestly, for banks, there is not a clear added value in OB and they mostly jump to this Open Banking bandwagon because of the fear of backlash or fear of “not doing what everyone else is doing”.
Open Banking = MEH, could be better. Yeah, you’ve heard it first.
Unless we get more details on where the quality implementation is and how to quantify OB, we, Gen Y, and Gen Z are out.
CyberGem’s opinion on OB:
Gen Y will be displayed as Y / Gen Z will be displayed as Z from now on.
Y: As a millennial, I am tech-savvy by default. I use a lot of applications, but to be honest, I never connected any of them through some APIs. The key reasons are firstly technical obstacles and secondly, it is far from a simple plugin. I am too lazy to go through all the process for no value added at all- a lot of my peers got the same opinion. Also regarding data, I trust my bank and I am absolutely okay with keeping my data “closed”.
Z: Can you stop throwing so much shade on Open Banking? I am tired of liking them all. I didn’t even know what’s the deal with Open Banking until I noticed my bank implementing it to their app structure not so long ago. At first, I wasn’t sure how to feel about providing my data to third parties just so my UX could get smoother or whatever the goddamn reason was. I am not here for using some APIs (which are at this point useless) just so I can have FinTechs snitching on my data behind my back. But sadly, not every Zoomer knows what kind of data the company collects on them, they just accept the terms so they can quickly use the app. Nowadays, sharing your data and on top of that doing it consciously is a very double-edge sword(ed), just look at the TikTok drama! If you’re reading this Open Banking, you can’t sit with us. That’s on period.
Give away your most valuable resource
“Hey banks, you suck at customer experience. Just build some open APIs so that other companies can build their business on data of your customers easier, that’ll do.”
Repeat this sentence 10 times:
Data are the most valuable resource of any company. My data are goddamn valuable too.
With the growth of unicorn companies and BigTechs, banks are losing the race in the amount of the data they possess about customers. Besides that, they’re facing legacy challenges, such as customer retention, rising expectations, and security breaches, hence they slow down the speed of the bank's innovation schedule.
At first, it might seem like a good idea, but are we sure that customers can embrace proclaimed advantages of interconnecting data?
Honestly, for banks, there is not a clear added value in Open Banking and banks mostly jump in because of fear of backlash or fear of “not doing what other competitors do”.
We tested Open Banking:
We have linked up accounts on our bank apps but sadly all it could do was showing the balance, it doesn’t currently have any real functionality for better user experience. We are still waiting on some proper challenges in the market so it gets better after there are more apps with much real function. It can be very exciting to lead this discussion next year, this time. To make Open Banking a little more attractive to users, they gotta figure out how to get customers services they want to use and do things differently and better than before.
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CyberGem is your new stream of opinions on technology’s hottest hypes.
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