Open banking provides the foundation for real business opportunities that are tangible and disruptive. On the one hand, clients of financial service providers clearly benefit from a more client-focused approach with greater service diversification and the ability to better control their own data. On the other hand, financial service providers will be able to collect and analyse real consumer data in order to offer more innovative products and services. This has already proved particularly effective for retail banks, which are at the forefront of open banking initiatives. We have identified three areas that are currently shaping the Swiss open banking landscape: Real time sharing of account data, direct initiation of payments and real time provision of information.In our first article of the series, we explored why open banking is a strategic opportunity, not just a regulatory ‘must’ for Swiss banks. Now, we delve into which areas are currently shaping the Swiss open banking landscape.
Open banking provides the foundation for real business opportunities that are tangible and disruptive. On the one hand, clients of financial service providers will clearly benefit from a more client-focused approach with greater service diversification and the ability to better control their own data. On the other hand, financial service providers will be able to collect and analyse real consumer data in order to offer more innovative products and services. This has already proved particularly effective for retail banks, which are at the forefront of open banking initiatives. We have identified three areas that are currently shaping the Swiss open banking landscape:
• New multi banking services by sharing account data in real time
• New payment services by directly initiating payments with no intermediary
• New services beyond the traditional banking offering
1) Sharing account data in real time
Open banking makes it easier for third-party providers to access banking account data, analyse and make use of it by offering new services to clients. A typical use case is the aggregation of bank accounts, where information from several accounts held with different banks can be collected and presented on one single overview. The consolidated view helps clients to manage their wealth online by maintaining an overview of multiple banking relationships and accounts in real time. Instead of using different login mechanisms, the client has the possibility to use only one set of data to access all their information.
Significant use cases in this area are already available in Switzerland. This includes Credit Suisse's online banking portal Credit Suisse Direct, which, amongst other features, enables payment processing and liquidity management with accounts at other banks. Another notable use case is Bexio's business software for small businesses, which offers automatic data exchange with UBS online banking and synchronisation of payment transactions with e-banking at PostFinance, ZKB or Raiffeisen.
2) Directly initiating payments with no intermediary
Next to traditional payment methods such as credit cards, clients can now also use other payment service providers to make P2P, e-commerce and POS payments directly from their account. In addition, banks can ensure more efficient payment processing and improved cash flow transparency through (almost) real time settlement of receivables and payables.
A relevant use case in this area in Switzerland is the TWINT mobile payment app. TWINT is a digital wallet founded in 2014 and merged with Paymit in 2016, which unites the largest Swiss banks and SIX in their support of a mobile payment solution. The aim is to challenge international competitors such as ApplePay, which are increasingly entering the Swiss market. The main features of the app are the mobile retail payment solution, sending and requesting money from smartphone to smartphone, and digital loyalty benefits such as coupons, stamp cards and loyalty cards.
3) Services beyond the traditional banking offering
Open banking is often perceived as only relevant for banks or financial service providers. However, because account data and access to bank statement information is rich and valuable, we believe open banking has a strong proposition that goes beyond financial services. Insurance, real estate or other industries could make good use of this information.
A noteworthy use case in the area of real time provision of information in Switzerland is the cooperation between Hypothekarbank Lenzburg and the fintech TaxLevel. The latter’s tax module will be linked to the Hypothekarbank Lenzburg’s core banking system Finstar (which is also offered to other banks) at the end of 2018. This service enables Finstar banks to merge tax-relevant business and portfolio data from various internal and external sources. One of the benefits is that the bank can create future-oriented tax calculations for its clients, e.g. to determine the tax consequences of transactions.
More innovation to come
At Deloitte, we see the challenge for banks in redesigning their strategy and the associated business model in the light of open banking disruptive innovations. This will mean a huge shift towards a more creative and collaborative way of thinking in the banking community – a development that is already underway in various regions of the world and that has produced the first interesting and notable use cases in the Swiss banking landscape. We expect to see many more use cases in the near future. These first examples on the market will only represent the beginning of an interesting and disruptive development in the Swiss banking industry.