Why banks must evolve their operating model to capitalise on the commercial opportunities of Open Banking
In this blog, Josje Fiolet and Mounaim Cortet, Senior Managers at INNOPAY, discuss how banks need to update their ways of working to realise the commercial benefits of Open Banking. They provide an introduction to the six main challenges for banks and propose a targeted approach to help them improve their operating model in three key areas.
To receive exclusive access to the extended Paper, which discusses these issues in more detail, readers are invited to download our paper 'Executing Open Banking at scale and speed requires a supporting operating model'.
Leveraging Open Banking at scale and speed depends on integrating key activities within the bank’s daily operations
Open Banking is a key strategic component as banks look to secure their future relevance in the digital economy. However, many banks have been slow to recognise the importance of fully integrating Open Banking activities within their existing operating model.
Only by fully understanding the new dynamics at play, and then taking the right steps to evolve their current operating model, will banks be able to effectively integrate Open Banking initiatives and teams into their daily operations.
And this integration implies that Open Banking must become a fundamental part of the day-to-day value creating activities of the bank. Continuing to treat it as a standalone domain will not effectively contribute to the bank’s strategic objectives. We see six areas which require specific focus.
Six common challenges for banks when integrating Open Banking activities
From our experience in supporting Open Banking transformations, we observe that six challenges are impeding banks from monetising Open Banking at scale and speed. These challenges closely align with the need to integrate important groups of activities into the existing daily value creation operations of banks.
These six groups of activities include:
- API proposition development & management
- API pre-sales & business development
- API onboarding & risk management
- API service, support & relationship management
- API business plan, budgets & incentive schemes
- API platform capability
For each of the activities, banks need to ask themselves: Are these activities, and the teams that conduct them, fully integrated within the daily operations of the bank?
Integrating each activity comes with a specific set of challenges that we discuss in more detail in the extended Paper. If integration is not managed effectively, banks will be unable to operate Open Banking at scale and speed, and ultimately struggle to deliver on their strategic objectives.
Three operating model elements which will support the integration of these activities
Once the challenges of scaling Open Banking at an activity level are understood, it is possible to identify the required modifications to a bank's existing operating model. Although the operating model is built of many components, we have pinpointed three elements that require particular attention to successfully embed Open Banking.
These three elements are:
- Roles and responsibilities
- Governance & way of working
- Data & metrics
Each bank should consider how the Open Banking activities can be effectively integrated by making adjustments to these three elements of their operating model. The answer will vary based on the particular setup and maturity within each bank.
By doing this, it is possible to manage changes in a consistent manner, and to maintain a coherent operating model that ensures efficient daily operations whilst supporting the agreed Open Banking strategy. And since the Open Banking journey has only just started, banks will need to constantly review and refine their ongoing responses to changing circumstances.
INNOPAY has supported several banks in their Open Banking transformation, bridging strategy and scaled execution by establishing a coherent operating model that supports their business objectives. To further discuss your own case and how we can help you, do not hesitate to contact Josje Fiolet or Mounaim Cortet.
And don't forget, if you would like to access the extended Paper on how to manage this operating model transition, please download our paper 'Executing Open Banking at scale and speed requires a supporting operating model'