As mentioned in my previous blog, consumers across the globe are increasingly interested in FinTech-fueled innovative services, but also much more open to going to other providers beyond their current primary banks, if necessary, to get them. As a reminder, the insights discussed here are driven by CGI’s 2017 Global Financial Consumer Survey, which surveyed 2,250 bank consumers in nine countries. In this blog, we look at consumer views on open banking, then move on to recommendations for banks and FinTechs.
We are in the early days of the emerging open banking ecosystem, enabled by open API technology and accelerated by regulators, as seen with PSD2 in Europe. Because there is precious little attention paid to what consumers think of this trend, we added a set of questions to test consumers’ openness to using third-party providers for commonplace banking services. We found that over half of banking consumers are open to third-party service providers for everyday banking services.
Consumers aren’t just willing to look beyond their current primary bank for innovative services. They’re also quite willing to look to third-party providers for even mundane tasks, creating the potential for real disintermediation of banking relationships. A further issue being that 60% of consumers say that they’ll still hold banks responsible for their money despite using a third party.
Recommendations for banks
As FinTech firms aggressively push their way into the financial services space, established banks are honing in on how to effectively respond to the competitive threat. However, the growing interest in new services, coupled with the greater openness to newer, third-party providers, reveals an urgency for banks to rapidly accelerate their efforts to get customer-focused, innovative digital services to market.
Partnerships with FinTechs offer the fastest and clearest approach. Now is the time for banks to move quickly to establish the necessary mechanisms to support this partnership approach, including strategic clarity, technology capabilities (including open APIs), customer and business processes, etc. This certainly doesn’t mean that external sources are the only sources of innovation, but it does mean that banks should consider augmenting their internal innovation efforts with external sources to move at the pace that consumers are demanding.
Recommendations for FinTechs
Despite the headway they’ve made in launching new value-added digital services and gaining market share, FinTechs still face a major challenge. CGI’s survey shows that consumers still prefer their current financial institution, mainly due to a lack of trust in new service providers. Getting access to consumers and gaining their trust are significant hurdles for FinTechs, challenges that partnerships with banks can overcome. For the vast majority of FinTech players, partnerships with banks offer the best and fastest way forward.