Most large banks said that providing open banking services for their commercial clients is a key strategic initiative in their digital transformation programs, and many expect open banking to help them achieve double-digit revenue growth, according to a global research report by Accenture.
Open banking enables financial services commercial customers to share their financial data securely with banks and third parties, making it possible to easily transfer funds, compare products and manage accounts using application program interfaces.
According to the study, 90 per cent of large banks said they plan to provide open banking services for their commercial clients, with more than half (54 per cent) of large banks expecting open banking to help them grow their revenues up to 10 per cent and another one-third (35 per cent) expecting it to help them grow their revenues up to 20 per cent.
The report, “It’s Now Open Banking, Do You Know What Your Commercial Clients Want From It?,” is based on a global survey of more than 750 executives at global banks, small- and medium-sized enterprises (SMEs), and large corporations.
Among other key findings:
- Commercial bank customers often want the same things that retail bank customers want — more-innovative processes and a better customer experience — which open banking can facilitate.
- When asked to identify the most significant benefit of using an open banking ecosystem platform, respondents most often said gaining access to convenient and innovative banking services, cited by 30 per cent and 23 per cent of executives at large corporations and SMEs, respectively.
Commercial bank customers also expect open banking to enable them to reach more clients and partners (cited by 19 per cent of large corporations and 25 per cent of SMEs) and optimise their processes (cited by 17 per cent of large corporations and 20 per cent of SMEs).
When asked to identify the business areas that could be most improved in partnership with their bank through open banking, respondents at SMEs and large corporations cited payments, finance and cash management.
“While the discussion around open banking to date has centered on retail banking consumers, we found that commercial customers are looking for much of the same things from their bank,” said Alan McIntyre, a senior managing director at Accenture and head of its banking practice.
“Open banking provides banks an opportunity to use platform ecosystems to deliver more and better services, including helping their SME and large corporate clients extend their market reach and leverage cutting-edge banking services.”
The vast majority of large banks (90 per cent) have invested in open banking initiatives for their commercial customers or plan to do so next year; more than two-thirds (71 per cent) plan to invest up to US$20 million, and a quarter (24 per cent) plan to invest more than $20 million, to build out their open commercial platforms, offer third-party services and explore open banking use cases.
The study also found that more than one-third (35 per cent) of commercial bank customers already participate in open banking platforms and another 42 per cent plan to do so in 2019. When asked who they would prefer to partner with on open banking initiatives, nearly three-quarters (72 per cent) of large corporate clients and two-thirds (65 per cent) of SMEs cited their bank; only 15 per cent of commercial clients would prefer a non-bank technology provider.
“There’s an influx of nimble, non-bank digital newcomers using open banking innovation to woo commercial firms from their traditional banks,” McIntyre said.
“To stave off these competitors, incumbent banks can quickly position themselves as leaders in open banking by adapting business and operating models that embrace platform ecosystems. Banks have a distinct advantage to lead this charge — their existing bonds with their commercial customers built on trust, security and privacy — but they should leave their comfort zone by offering solutions that tightly align with their customers’ needs rather than the products banks want to sell.”