The emergence of smartphones and mobile devices in recent years tends to transform the world around us from "brick and mortar" to "online." People buy not only clothes, electronics and plane tickets online but also daily necessities such as groceries and other daily goods using ecommerc portals. This cultural shift extends from millennials to baby boomers. With such a cultural shift sweeping for buying habits, people also anticipate online mediums to fulfill all banking needs. In fact, in no time, more than half of the world's banks process their transactions in the cloud.
With steady technology landscape changes, cultural change in buying behavior, new regulatory requirements, and rising service standards across all channels, banks will have to adapt and innovate very quickly to remain competitive and provide a premium banking experience that customers require. Together with shifting consumer patterns and fintech firms, open banking regulatory environment encourages banks to learn to accept digital transformation for more profitable operations. Research from the Digital Banking Report suggests that both last year and as a growing trend this year, open banking and expanding the use of APIs were of significant importance, ranking top three.
According to Splendid Unlimited Research in The Independent, by the end of 2018, there were only 9 percent of people in the UK who used open banking services. With consumers becoming increasingly receptive to banking services offered by non-financial services companies in their twenties and early thirties, open APIs come at a timely time for technology giants like Google, Amazon, Facebook, Apple, and others–providing more comprehensive access to financial data from consumers, according to The Financial Brand.
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In 2019, there appears to be more changes in the financial services industry, focusing on providing enhanced digital customer experience. In this sense, banks would have to implement data analytics capabilities, invest in innovation, and security while realizing that partnership with fintech firms or diverting in this sector could provide the necessary elements to consider open banking and APIs as a burgeoning opportunity.
Banks can exploit the ability of open APIs to keep pace with both small and large fintech providers outside of the regions where open banking and shared API regulations have been enacted. By revolutionizing in their existing product range, banks can embrace open banking APIs. They can pinpoint customer expectations and provide a more personalized banking experience to improve customer loyalty.
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