Open Banking Is Here.

Are You Ready?

 Open banking is about solving the struggle to
differentiate. It’s about helping financial institutions

As Open Banking use the wealth of data at their disposal to be truly

innovative – launching new partnerships, new

Pushes the Limits ways of engaging customers and new revenue

opportunities. Ultimately, it’s about being more

of Financial Services, nimble, agile and responsive to the ever-changing

needs of clients, consumers and regulators.
Embracing New By using means such as open application
programming interfaces (APIs) to share banking
Possibilities Will data with other entities, financial institutions can:

Be Key to Thriving • Co-innovate with third parties to expand

their service offerings
in the Future • Create more intuitive and frictionless
customer journeys
• Pursue new business models and
Open banking is proving to be a game revenue streams
changer for financial services. As the • Accelerate growth and expand into
last pieces of a more modern, flexible new markets
technology infrastructure fall into place, • Increase speed to market without inviting
Fintech disrupters and financial institutions additional risk
with a clear strategy are surging ahead • Compete with Fintech challengers and
with innovative and profitable open the big banks
banking initiatives. Increasingly, open banking is an important strategy
and a necessary investment. Many financial
Those that seize the opportunity to give institutions have already embraced open banking
their customers more, deliver it through to deliver a superior customer experience, reach
unique and compelling digital experiences the next generation of customers through new
distribution channels and grow deposits and loans
and work with Fintechs to challenge
outside their branch footprint. With many others
“the way banking is done” can adapt gearing up to move forward with open banking
and thrive in a changing world. initiatives, this leaves the minority of banks
without any open banking strategy at risk of
losing customers and being left behind.

According to research firm CB Insights, more than

80 percent of bankers say their business model is
either threatened or being changed by Fintechs.

Open banking will both accelerate that disruption

and allow financial institutions the opportunity to
participate and benefit from the change.

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 Market Forces Shaping Meanwhile, the U.S. Department of the Treasury
concluded in a 2018 report that the same type

the Push for Openness of open banking regulations cannot be readily

applied on this side of the pond due to significant
in the U.S. differences in the size, nature and diversity of the
financial services sector between the U.S. and
the U.K.
From a global perspective, the U.S. could seem
behind in open banking adoption. The sharing of Whether or not formal regulation is to come, U.S.
customer-authorized data has been mandated in financial institutions have the same capabilities
Europe by the Second Payments Services Directive at their disposal as banks across the globe, and
(PSD2), and in the United Kingdom, by the Open market forces continue to drive more American
Banking Implementation Entity (OBIE). Since banks to launch open banking initiatives.
those regulations were announced, many other The U.S. institutions moving ahead now see
jurisdictions such as Australia, Singapore and the benefits of open banking not only for their
Japan have also passed open banking measures. customers and third-party partners, but also
for their own businesses.

Open Banking Hot Spots

North America
• Industry-led initiatives for API standardization are ongoing
Europe/U.K.
• Large bank and vendor API integration efforts are underway • Both the EU’s revised payment services directive (PSD2)
• Canadian government launches advisory committee on open banking and U.K.’s Open Banking Standard are live

Asia
• Singapore, India and
China take steps to
boost open banking
API adoption by
fintechs
• Japan implements
Mexico slow rollout of
• Passage of open banking
“FinTech Law” in • The Hong Kong
March 2018 sets Monetary Authority
the stage for an launches open-API
open banking framework in
standard by phased approach
requiring financial
institutions to
establish open APIs

Africa
• Watching PSD2 in Europe closely
• Nigeria sets up an Open Technology
Latin America
Foundation for developing open API standards Australia & New Zealand
• Brazil’s central bank issues new banking rules
• South Africa Reserve Bank (SARB) establishes • Implementing open banking regulations
• Chile regulators follow Brazil’s lead a Fintech program in a phased approach

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 The promises of open banking are the same
opportunities banks have been looking for –
accelerated growth, competitive differentiation,
better customer experience and new revenue.
U.S. financial institutions could still pull ahead in
the race to create new, differentiated experiences
for customers. By some measures, open banking
regulations in the U.K. have not yet produced the
impact lawmakers hoped to see.

Research from YouGov, a global public opinion

and data company, shows that close to
three quarters of U.K. adults have not heard
of open banking.

The competitive offerings predicted to emerge are

taking a back seat while many U.K. banks focus
on meeting requirements rather than seizing new
opportunities. Some instances have even been
reported of banks warning customers of the risks
of open banking.
In a recent survey conducted by Tink, European
financial executives struggling to check all the
boxes of open banking compliance cited regulation
as the single biggest overall threat to banking.
Freed from the need to make compliance their top
open banking priority, U.S. institutions may have
an edge in thinking innovatively and using new
strategies to take on Fintech challengers or
partner with them to create new products.

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 Banks Still Hold the
Key to Consumer Trust
Fintech challengers have been slowly eroding
banking relationships for years. Those potentially
disruptive, sometimes unregulated businesses have
been able to move forward with innovation quickly,
offering simple but powerful services
that fill gaps in the offerings of traditional
financial institutions.
Companies like Venmo, Mint and Rocket Mortgage
offer customers easy ways to make payments,
understand their finances and get approved for a
loan – services that should be table stakes for banks
to deliver. Even the Starbucks app, with over
$1.2 billion loaded on it at any time (as reported
by the Wall Street Journal), holds more funds
than many banks.
As companies known for things like mobile card
processing and e-commerce seek approval for

Fintechs aren’t just acting more like banks,

some are applying for federal bank charters to
actually become banks.

banking charters, additional businesses outside the

traditional banking realm may make similar bids –
opening the door to a new species
of businesses turned banks.
Financial institutions can use open banking initiatives
to compete with the challengers in
three key ways:
1. Moving faster to develop and deliver similar
high-value experiences
2. Partnering with complementary Fintechs
to expand their services
3. Becoming “the bank behind” the Fintech –
offering Banking as a Service (BaaS) to fuel
the tech company’s banking functionality

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 The third option, BaaS, is not only a way for banks According to the World FinTech Report 2018,
to avoid being disrupted by tech companies. It 75.5 percent of Fintechs surveyed want to
also represents a major opportunity for financial collaborate with traditional financial services firms.
institutions to access new distribution channels for Customer data is being shared in multiple industries.
banking services and draw fee-based revenue from However, financial and transactional data is of
a source other than their accountholders. special interest to tech companies because of
the many ways it can be used to add value. For
example, imagine the type of highly personalized
By allowing Fintech partners to share in their
financial services that could be created by working
banking ecosystem, financial institutions can with a Fintech to aggregate real-time data about
participate in the growing migration of financial customer spending habits, credit history and
services from traditional banking channels into information from pay stubs. A financial institution
the fabric of customers’ lives. could compare the information with the customer’s
financial goals to offer more meaningful
financial advice.
While consumers can continue to go directly to
Fintechs for financial services, research shows
financial institutions still have the home court
advantage on consumer trust. When Bain &
Company asked consumers if they are willing to “While the banking
share more data to get a better product offering, industry will continue
78 percent said they are willing to share with their
primary bank, 63 percent said they would share
to be challenged and
with another bank, and just 43 percent would disrupted by digital
share with a nonbank.
giants and Fintechs,
This level of trust is due, in part, to the fact that the
financial services industry is regulated to protect it is in the strongest
consumers. Plus, consumers have increasing position yet to reverse
concerns about the number of entities Fintechs
share data with. PayPal, for example, has disclosed
the dynamic and become
the names of hundreds of third parties it may share a challenger and
a customer’s personal information with.
generate win-wins
So far, the industry has barely scratched the surface
on the possibilities of BaaS. But a growing multitude with the disrupters.”
of banks have launched successful partnership
models described in the second option above. This Celent predicts in From Challenged to
model is relatively easy to pursue, and many banks Challenger: Becoming a 21st Century Bank
are finding that they have their pick of Fintechs to in an Open Banking World, 2019
partner with.

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 Competing With and JPMorgan Chase, have launched their own
developer hub that connects third parties to an

the Big Banks API catalog.

Open banking can help level the playing field not At the same time, open banking has given
only with Fintech challengers, but also with the community banks more ammunition to fight back
nation’s largest banks – which have been gaining by empowering them to work independently with
ground in recent years. Fintechs to create new solutions.
Bank of America already has a relationship with
one in five Gen Z consumers; and the 15 largest
U.S. banks manage 77 percent of all FDIC-insured Banks of any size can participate in open banking
assets. With these big banks spending billions on and add value for their customers.
technology, it’s hard to imagine how smaller banks
can continue to offer competitive offerings to
attract new customers.
Largest U.S. Bank Tech
Budgets for 2019
Open banking has in some ways intensified
competition within the financial services industry, JP Morgan Chase: $11.4 billion
because the large banks have become some of the
first movers in open banking initiatives. Bank of America: $10 billion
Wells Fargo: $9 billion
For example, BBVA was among the first to launch Citigroup: $8 billion
a BaaS platform in the U.S., and the organization
has recently announced a partnership with Wise, a
Fintech that will leverage the BBVA Open Platform Source: Business Insider, Here’s a breakdown
to offer digital banking for small business. Several of how much US banks are spending on
others, including Wells Fargo, Bank of America technology, March 2019

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7
 The Modern Tech
Stack Changes All
While many financial institutions are eager to
experience the benefits of becoming more open,
it’s important to note that the answer is nowhere
as simple as opening the data floodgates. In fact,
Case Study:
there’s a wrong way to share data with third parties.
Poorly implemented, open APIs can create a
Synchrony Financial
tangled web of integration, open security gaps
and set a financial institution back rather than Synchrony Financial offers a key example of what
propelling it forward: financial institutions can create with open banking.
The bank underwent an incredible transformation
• Making complete data sets available in
and, in 2019, was awarded a Model Bank Award
industry-recognized standard formats
from research and advisory firm Celent.
is imperative, such as those established by
Afinis (formerly known as IFX or Interactive The Celent case study shares how Synchrony
Financial Exchange) and the Banking Industry Bank’s strategy emerged from the desire to be
Architecture Network (BIAN) a truly best-in-class, digital bank. Its goal was to
digitize customer-facing business services as well
• While interfaces are nothing new,
as internal processes to create a frictionless,
more modern formats such as JSON and
end-to-end digital flow of data and services
RESTful APIs are lighter, more flexible and
long into the future.
require less bandwidth – making them ideal
for a mobile-first world The critical technology achievement of the entire
transformation is Synchrony’s Business Services
• Real-time events drawn from the core and
Layer. The BSL provides them with an intelligent
customer channels offer a particular advantage
cloud-based architecture from which new solutions
because they can create an event stream that
can easily be plugged in and integrated to the
gives third parties access to a wealth of data
entire landscape.
updated in real time
Because of the extensive transformation, the bank
As noted by PwC, in Opening the Bank for a
can implement capabilities in its digital platforms
New Era of Growth, modern APIs can reduce the
in an extremely short amount of time. The bank
cost, time and complexity for banks to connect
owns its own destiny, free to create differentiating
third-party solutions with their core systems. Celent
experiences which allow it to compete and attract
goes a step further to declare early generations of
deposits against an ever-crowded market of
technology “fundamentally incapable of meeting
challengers and entrants.
the needs of banks and Fintechs pursuing a platform
strategy.” In From Challenged to Challenger: For example, when the bank launches its new
Becoming a 21st Century Bank in an Open Banking account opening process, it expects the account
World, Celent outlines the following four principles opening experience to be
of a modern tech stack: API first, cloud-native, 50 percent faster.
open data model and real time 24x7x365.
With the latest waves of technology development
bringing advancement to all four of those design
principles, financial institutions are empowered like
never before to transform the customer experience
and help people bank the way they want to bank.

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 New Customers: control of their finances. Open banking can support
this goal by making it faster and easier for the bank

New Ways to to partner with third parties to offer integrated

personal financial management tools for budgeting,
Serve Them purchase affordability and automatic investing.
As the bank’s customers go about their lives, the
financial institution can continue offering financial
Today’s customers are ready for innovation. The
guidance in other contexts. By partnering with
gig economy is exploding (with the U.S. freelance
e-commerce sites like Amazon, the bank could
workforce now up to 56.7 million people, according
make real-time banking account balances and
to Upwork). Gen Z is predicted to become the most
monthly budget information visible at the point of
entrepreneurial generation yet, and both Millennials
purchase. The bank could also make HSA account
and Gen Z are fully digital native.
balances and other account details available through
What will the face of banking customers look like in popular pharmacy apps to support better-informed
five years? What problems can financial institutions decisions about healthcare spending.
solve for them? As new customers emerge, so will
Freely sharing data can also help the bank remove
new brands to meet their shifting needs.
friction from these experiences. For example, if
customers would like to create a monthly budget
By using open banking to expand their through the bank’s online budgeting tool, all known
capabilities, financial institutions can develop information about them, including detailed spending
a specific brand and expand into niche markets habits, can be auto-filled into the form. They can
through their digital presence. easily save progress and continue where they left
off from another device or at a branch.
This type of advanced support for customers’
Which bank or Fintech will become known for
financial health encourages customers to deepen
helping microbusinesses thrive? Which will create
emotional bonds to the financial institution. It’s also
unprecedented levels of personalization and become
the type of service customers would be willing
branded as the bank that knows you?
to pay for – creating the potential to draw in new
Imagine that a financial institution has set a strategy customers and generate additional revenue.
to become the leader in helping consumers take

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 Where’s the Money?
Solving Problems for
Commercial Customers The need to embrace new strategies and compete
in different ways is clear, but how do financial
institutions monetize open banking? At the most
fundamental level, financial institutions can use
Financial institutions interested in using open open banking technology to accelerate digital
banking to pursue new business models may find transformation and create differentiating customer
that commercial customers offer some of the experiences – boosting adoption of digital channels
strongest opportunities for growth and expansion. to drive relationships, revenue and retention. Open
banking can also support expansion into new
markets, driving deposits to fuel lending.
When business customers do well, the banks that
serve them do well – and with open banking there
will be many new ways to help them prosper. Beyond supporting the more traditional methods
for banks to make money, a number of pricing
models can be followed to turn the sharing of
Consider the property management industry as an banking data or functionality with third parties
example. These firms manage a large number of into a revenue driving activity.
properties and an even a larger number of accounts
manually. Financial institutions can give them a
more efficient way to manage all of their finances Banks that choose to share data can charge fees
by sharing data about account balances to third parties based on the volume or type of
and transactions in real time with property data they consume, the number of times they call
management software. for data, or the number of transactions completed
through an interface. There are also various ways
This makes it easy for the property management
for banks to pass on a portion of the fee to their
companies to reconcile operating accounts on
customers, or to earn revenue from other banks
the fly. When a company purchases a new rental
by building and selling new innovations through
property, its bank could provide the loan and offer
an open marketplace.
services that automatically sign the property up
for landscaping services, trash collection and Similarly, financial institutions that choose to share
other utilities. banking functionality with third parties can generate
fees from their Fintech partners or the Fintech’s
Any number of niche markets could be served by
customers (the consumer of the banking services).
creating these types of compelling experiences.
Financial institutions could also expand their services As additional revenue streams materialize – including
to offer conveniences with a broad appeal across many options banks may never have considered
industries, such as HR and marketing support, before – the modernization and standardization of
accounting services, risk analysis and insurance. open banking continues to make it faster and easier
to move forward. When the first waves of open
banking technology were developed, lengthy and
complex professional services engagements were
required. Today, new possibilities are developing
rapidly, making it easier than ever to embrace
open banking strategies.

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 How to Win:
Think Like a
Venture Capitalist
The range of responses to open banking will be
great. Some financial institutions will use open
banking technology to reimagine a new digital
future and flourish beyond all expectations.
Some will move forward with the new innovations
forged by others. Those who stand still will not
remain standing.
In a consolidating industry, where the number of
FDIC-insured banking institutions has dropped from
over 8,500 to about 5,600 in a decade, financial
institutions need to be bold, collaborate and
continue innovating to secure their future.
Open banking strategies allow financial institutions
to be creative and differentiate in the same way
a venture capitalist identifies a problem and then
devotes resources to solve it in a way that’s unlike
anything the market has seen before.
A clear strategy and the right technology,
resources and support are all that’s needed to
move forward. And yet, many banks struggle
to embrace transformation.

Banks struggle between the need to open their

systems to external partners and clients via APIs,
and the business imperative to not lose control of
the user interaction with their clients.
Aite – Corporate Banking API
Strategies and Monetization

For some organizations, it can feel like going

against their nature to share customer data with
third parties. Others may hesitate due to the
perceived risk of sharing data. Many have trouble
making the investment without a direct tie to
immediate revenue.

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 Those concerned with security should consider the
uncontrolled methods of data sharing happening
today. Many third-party data aggregators ask
customers to share their online banking user
A Strong Foundation
credentials and then use screen scraping to gather
data. This puts customers at risk when they lose
for Open Banking
visibility into how their data is used and by whom.
Fiserv has laid a strong foundation for
open banking.
Banks can fear this inevitable open-banking
transformation, or they can embrace it, and
benefit from becoming the solution provider Fiserv solutions are built on an
that customers are so desperately seeking. enterprise services framework
(ESF), which creates an open and
American Banker, Open Banking simplified flow of information
is an opportunity, April 2019 between solutions.

For financial institutions wanting to

Using an open banking approach, financial make non-Fiserv solutions part of the
institutions can actually create a more secure customer journey, the ESF ecosystem
method of offering customers the same services. is made available as Communicator
Banks that employ a layered security strategy Advantage™ from Fiserv. Developers
using technology from a trusted vendor can take can use Communicator Advantage
advantage of the ideal ecosystem for data sharing. to integrate to Fiserv technology.
Furthermore, financial institutions can minimize Communicator Advantage exposes
risk by sharing data only when there is a sound tens of thousands of fields from bank
business case for doing so and appropriate core solutions from Fiserv through
security measures are in place. standardized methods.
Financial institutions will need to consider both their
opportunities and what may hold their organizations Real-time notification cloud streams
back. Changes may be required to their business are unique to the Fiserv offering and
model, operating model and infrastructure. make it possible for developers to
If there are any cultural limitations to being bold, incorporate real-time event notification
these should be acknowledged. Open banking can into new applications. Fiserv currently
help support and foster a culture of co-innovation. processes 500 million events per
month.

The real risk posed by open banking is missing out

In addition, API management
on the reward of moving forward – and creating
capabilities and microservices are
the potential of being left behind.
coming soon.

12
 Go Big or Go Home?
Pioneers of the industry have used open banking
Commitment to
to accelerate their business in a variety of ways –
replatforming their banks for greater agility, opening
Open Banking
their own developer portals and building services
on top of their data that are resold to other banks Building on foundational components already in place,
and Fintechs. Fiserv continues to implement its open banking
strategy, which involves three key deliverables:
All these options and countless more are
possibilities for financial institutions to pursue. Developer Portal: Clients and other
But less aggressive financial institutions don’t Fintech developers can use the portal
necessarily need to take on massive projects to to access open APIs, documentation
profit from open banking. and notification cloud streams. This
environment will offer a sandbox for
testing, support and code validation.
Even small steps forward in a phased approach
can have a positive impact on growth and revenue.
Open Banking Marketplace:
Clients can use this Fiserv-sponsored
Wherever banks choose to start, they should focus ecosystem to explore and purchase
on creating differentiation in the market, making a innovative Fintech products that are
positive impact on the consumer experience and preintegrated to Fiserv solutions.
aligning themselves with a technology partner
that offers as much strategic and tactical support
Open Banking Product: This Fiserv
as desired.
solution will help financial institutions
While highly aggressive banks may want a offer their own open banking portal
technology provider committed to providing more – enabling them to offer Banking as
flexibility and agency – empowering them to a Service, co-innovate with Fintechs,
manage their own transformation – others will deliver financial services through
prefer strategic guidance and partnership. exciting new channels and accelerate
time to market.

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 Banks of any size and appetite for open banking
should look for a technology partner focused on:
Open Banking Is
• Offering complete data through modern Key to Thriving
methods and in standard formats
• Providing new, easier ways to access in the Future
and share data
Banks have a large quantity of high quality data at
• Offering open event streams from the core
their disposal. By using open banking to share that
and surround channels
data with other entities, they can co-innovate with
• Maintaining data security and transparency Fintechs, develop value-added services on top of
• Supporting faster time to market of their solutions, differentiate their brand to drive
differentiating capabilities retention and growth, and explore new, profitable
business models.
• Making it easy to develop, collaborate and
test emerging concepts While many financial institutions are already profiting
from open banking, the full potential is still coming
• Helping financial institutions take advantage
into focus. Open banking may become a catalyst to
of innovations created by others
interconnect everything and create unprecedented
• Enabling a strategy of selling bank-developed levels of personalization. It may also spur additional
innovations to others in the industry innovations in AI, robotic process automation and
data analytics.

Open Marketplaces
As more banks and Fintechs make inroads
Spur Innovation with open banking strategies, one thing is
clear: open banking plays a crucial role in the
It’s worth expanding on the last two bullet points future of banking.
regarding what to look for in a technology partner.
Integration and data aggregation tools are useful, but
will take an organization only so far. Open APIs and Changes to the competitive landscape will keep
API management capabilities may be essential tools coming faster than ever.
when it comes to open banking, but the real payoff
In the end, the victors will not be those that stand
of open banking comes from collaboration and the
back to watch how it all unfolds. They will be the
ability to tap into the creativity of others.
financial institutions that choose their destiny, take
Open marketplaces, where financial institutions can control of the customer experience and test the
access solutions created by others, enlarges the boundaries of how and where financial services
pool of talent, resources and inventiveness brought are delivered.
to bear on market challenges. Ultimately, this can
enable financial institutions to deliver greater value
to their customers through personalized rather than
Connect With Us
commoditized services.
For more information about how
Fiserv can support your open banking
strategy, call 800-872-7882,
By making the sharing of innovation possible,
email getsolutions@fiserv.com
open marketplaces reduce the time, effort and
or visit fiserv.com.
expense involved in bringing new products and
services to market.

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About Fiserv
Fiserv is driving innovation in Payments, Processing Services, Risk & Compliance, Customer & Channel
Management and Insights & Optimization. Our solutions help clients deliver financial services at the speed of life
to enhance the way people live and work today. Visit fiserv.com to learn more.

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