The battle of the banks is on. And nobody knows who is going to come out on top. In the one corner we have the more traditional players. The darlings of the banking sector who have been around for decades and have perpetually dominated the market. And in the other corner, we have the digital up-and-comers – Tyme Bank, Bank Zero and Discovery Bank. All of these promising lower fees and interest rates for savers and offering consumers more transparent product offerings.
The former are built on banking systems that are old and in need of digitalisation, the latter – these exciting and fresh fintech start-ups –are effectively using innovative technologies to provide better services. According to Jordan Weir, a trader at Citadel, along with the emergence of new banks, we are seeing consumers demanding that innovative products and services be added to their existing banking portfolio.
“The more competition there is, the more beneficial it will be for the end consumer,” says Weir. “The introduction of new entrants into the banking space means that the pricing models and benefits currently linked to client banking solutions will become even more competitive and thus more rewarding for the end consumer. More competition also means a higher potential for a decrease in banking costs.”
From owning infrastructure to leveraging emerging resources
What gives these banks an edge over their more-established competitors is the fact that they are active members of the sharing economy and that they take a more collaborative approach to financial services. Open banking sees data being shared through application programming interfaces (APIs) between different unaffiliated parties. The ultimate goal of this approach to banking is to deliver enhanced capabilities, to improve customer experience, to generate new revenue streams and to provide a sustainable service model for underserved markets.
For traditional banks, the pressure is on to change their culture and evolve their operating models. These players also need to accelerate transformation by moving beyond legacy infrastructure and develop strategies to deploy new ways of working. If these financial services firms open up their APIs, they can access the latest and most innovative technologies; enabling them to retain existing customers and attract prospective clients in the process.
Want to find out more about the sharing economy, digital banking and how digital technologies are changing your industry? Our monthly newsletter is the resource you need. Have it delivered straight to your inbox by subscribing below.