WHAT DOES OPEN BANKING OFFER? In today’s competitive landscape, financial institutions must be flexible and adaptable. Open banking offers financial institutions adaptability, enabling them to do the following.


• Incorporate New Technologies — Financial institutions may not always have the time or resources to build new digital products, so connecting with a technology provider helps them more easily “plug in” new offerings without needing to develop them internally. Transforming the core into an upgradeable platform also enables institutions to add modular features, like video chat, digital account opening or real-time transfers, much faster.


• Consolidate and Use Data — APIs create a “universal language” to share data, which can connect all banking systems and processes in real time. With centralized behavioral and transactional data accessible by CRM and analytics dashboards, institutions can better determine customer needs and even use journey mapping to determine where potential customers are lost.


• Automate Backend Processes — By consolidating data from previously disparate systems, financial institutions eliminate dual data entry and gain time to focus on customers. In addition to decreasing the likelihood of mistakes, open banking also can offer pre-built workflows and task automation. For instance, an account opening system connected to an open platform can automate data entry for returning customers and use auto-decisioning to review credit and fraud risks.


WHAT ROLE DOES BaaS PLAY? Fintechs and other technology companies once were considered almost entirely as competition in the banking space. However, the expansion of open banking has reimagined that competition as potential collaborators that can ultimately support the institution and the end consumer.


Opening bank data to third parties increasingly enables institutions to co-create new financial products or allows nonbank organizations to offer their financial services. For these institutions, pushing open banking to its next step, otherwise known as BaaS, unlocks new markets or revenue streams.


Te BaaS marketplace is complex and growing every day. But the general premise is simple — each player has something to bring to the table in the ongoing effort to create new customer experiences. When providing BaaS, financial institutions function as experts in risk and regulation that trust their core service provider to offer traditional banking services to businesses, customers and other banks. Tat service provider operates as a facilitator that can assist in vetting other third- party technology providers. Each party gains revenue when consumers use these new financial products.


Technology companies bring their expertise in creating innovative product offerings through data and technology. Some technology companies, such as fintechs, exist specifically for the financial services industry. Others provide services that are not specific to banking yet are beneficial to financial services, like cloud security, chatbots and data tokenization. Trough BaaS, these companies gain the use of a financial institution’s regulated infrastructure to sell their technologies.


Te BaaS market is full of opportunities that financial institutions should keep an eye on. Likely, the next game- changing open banking applications will originate from the BaaS model.


DRIVING AN OPEN BANKING STRATEGY FORWARD As with all significant decisions, research into an institution’s particular open banking strategy and investments is critical. Financial institutions that wish to work with third-party technology providers must do their standard due diligence to qualify vendors.


Shanda Purcell brings more than 25 years of business and product development experience to her role of senior director of open banking in the product management area. She is currently responsible for working with and leading a team of dynamic and innovative professionals as part of CSI’s Open Banking Initiative, which enables banks and partners to connect  solutions of their choice, helping them stay  csiweb. com. CSI is a MBA associate member.


THE MISSOURI BANKER 23


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