Just because your company has access to new technologies doesn’t mean it’s making good use of them: see open banking. Over the last two and a half years, the U.K.’s financial institutions have started to embrace open banking, but many still aren’t providing the digital experiences that commercial clients are coming to expect. While some things may be easier to do, financial institutions still have a ways to go before they’re building the kinds of game-changing applications and services that open banking is supposed to enable.
A growing number of banks are realizing that open banking in itself will not bring in new customers, and as a result, more are investing in upgrading their related technologies. According to AltFi, a London-based fintech, 73% of financial institutions in the U.K. and 61% in the European Union plan to increase their open banking spend.
At the same time, more financial institutions are looking for ways to use open banking with their commercial clients. A 2018 Accenture survey that came out around the time that open banking legislation passed in the U.K., found more than 90% of U.K. and E.U. banks had already identified small businesses and large corporations as key strategic initiatives in their digital transformation programs. That’s still the case today, with more organizations identifying commercial-related opportunities to tackle. For instance, the Federation of Small Business estimates that 30% of all payments to SMBs are late, which is something open banking could fix.
As this technology evolves and banks do more to attract business clients, a greater number of use cases, experiences and platforms will be created. If your bank doesn’t get in front of open banking, someone else will.
Fortunately, financial institutions don’t have to break the bank or start from scratch with open banking, especially when it comes to creating APIs (application programming interfaces), a key technology that allows programs to speak to one another. With a fintech like FISPAN, financial institutions can easily create connections between their technologies and their customers’ accounting systems and enterprise resource planning platforms. Rather than a bank spending months creating their own APIs, FISPAN’s connector platform technology uses publicly available APIs to connect to a proprietary application or platform.
When it comes to building better experiences for customers, there are five things that banks must keep in mind.
APIs are a solution for only a small number of customers
One of the problems with APIs is that there’s no one-size-fits-all solution. Clients have different ERP systems they’d like to connect, while needs can vary depending on the customer. Rather than building a variety of APIs to meet everyone’s needs, banks can work with FISPAN, which has the capabilities to connect all kinds of programs to an institution’s systems.
You can’t spell APIs without application
It’s one thing to have an API, it’s another to create a value-added application that people want to use. You can’t create these kinds of applications overnight – they have to be well thought out, designed with the user in mind and more. As a bank, you will need to consider building these integrations in-house, partnering with a FinTech like FISPAN or purchasing, which you can learn more about in our ‘Build versus Buy’ blog here. Banks who partner with FISPAN, enable their business customers to integrate their banking capabilities into their ERP or accounting software.
You can create better banking experiences
Open banking is supposed to foster collaboration among banks and fintechs – the former has the clients, the latter can provide those customers with novel digital financial experiences. While some financial institutions think open banking will increase competition and erode their customer base, in reality, it allows them to provide more and better banking solutions for businesses.
Consider aggregating first
With open banking, customers can, at least in theory, easily access accounts at multiple banks. They can see all of their products – insurance, payroll, vendor payments – in one place. The banks that enable this kind of aggregation will be the ones that get more customers. Don’t wait to get aggregated. Instead, with FISPAN, start creating applications that pull in data from client ERP systems.
Hack your infrastructure
Once FISPAN is in place, its technology can be used to “hack” the user experiences of your bank’s other legacy products. As you see how much happier clients are with your new applications, and especially if their ERP-to-bank connection makes it easier for them to pay staff and vendors, you’ll want to assess your many other digital experiences, too. With FISPAN, you can quickly and efficiently revamp existing functionalities.
It’s important to remember that the ability to share data or create better systems is only the first step – you also need to implement open banking across your business. Rather than create APIs, which can take months to do, work with FISPAN to make those connections for you.
To learn more about FISPAN and how we can help your bank better serve your business clients, book a demo today.