Open banking starts with culture change

Open banking has swiftly turned from being a buzzword into the means of bringing financial services in the new paradigm. Change is inevitable and corporate culture is a good place to start.

For decades, banks and financial institutions have operated by traditional methods culminating in hefty legacy systems, high operating costs, manual procedures and profit-driven KPIs with too little focus on Digital and Innovation. For years this way of work has slowly but steadily been transforming into a particular corporate culture - a culture that takes long time to build and even longer to change.

In the meantime, the open banking phenomena has swiftly turned from being a “buzzword” into being a means of bringing the financial industry into a whole new paradigm of existence, posing a major historical disruption in the sector. Knowing that things will never be the same as before, how will the large financial institutions adapt to the new environment? Quoting Bill Clinton, The price of doing the same old thing is much higher than the price of change. Change is indeed inevitable and organisational culture seems to be a pretty good place to start.  

So, let us approach organisational culture from the commercial point of view, or more precisely from the open banking viewpoint. What is driving the Open Banking market into the new paradigm? Innovation, technology and ultimately customer focus seem to be some of the major game changers dictating who will win in the market. Let’s look at these aspects a little more closely to see how they can be reflected in culture change.

Culture is not likely to change simply on the basis of it becoming part of an agenda or mandate. In deeply rooted cultures inspiration is needed from the outside to stimulate fast adaptation and to keep up with the speed of the changing market. According to Fintech Disruptors report*, 84% of bankers in the Nordics saw Fintech partnerships as a means of achieving their goals. Such goals are amongst others uncovering new revenue streams, enhancing customer experience, finding alternative business models and tools in order to respond quickly to change. Start-ups and Fintechs imply “change” by their nature, and partnering with them is a sensible move to unlock access to innovation and technology alongside getting much needed inspiration.

Putting the customer at the centre means offering cutting edge products delivered with excellent customer experience. The balance of having the two is crucial. To deliver on these ambitions a certain degree of innovation powered by technology is a must. But how does one secure it in an organisational culture that is lagging decades behind? The solution may once again be found outside the company. While banks may initially be apprehensive external innovation is a doable and sensible activity with the right alignment and framework in place combined with a constructive integration process. BBVA, BPCE, Goldman Sachs have all referred to external sources in order to innovate. Spanish BBVA partnered with Holvi, French BPCE – with Fidor, while Goldman Sachs have had great success with Markus, driven out of an autonomous internal entity. Innovation needs freedom, and partnerships and autonomy are the path to success.

With all things taken into consideration, winning over the customer  will be a game changer in the open banking journey. Customer experience is becoming a deciding factor of digital success across multiple industries, and financial space is by no means an exception. The time is ripe to venture towards the business focus onto the customer by empowering such focus with customer-related KPIs. This is the first real change that needs to be executed in order to truly move the ship of legacy cultures. While profit focus is certainly what most businesses strive towards, getting more new customers and delivering an excellent customer experience are vital temperature measurements in the new financial paradigm.

* Fintech Disruptors report, Nordic edition “The Four Seas”, 2018 (MagnaCarta, Fintech Mundi).

Photo by Joshua Hoehne