Product marketplaces in open banking

In 2018 PSD2 and API will not only dominate industry discussions but will also be the basis for solutions implemented in the financial industry. Banks will also rely on open banking to fill gaps in their product offers through integration with highly specialized suppliers, in areas such as deposits, trading, investments, insurance and coupons. For many banks, this will mean a change in the business partnership model and the need to find their feet in a new reality.

Marketplace or banking as a platform?

By implementing open banking, banks have the choice between models that differ in the level of access and openness control — banking as a platform or an internal marketplace model. Banking as a platform offers suppliers full openness, enabling them to connect solutions freely using API and support systems. As a result, there are many suppliers, and the bank does not have full control over their quality. In the marketplace model, the bank independently selects external suppliers, and the quality of services provided by them is crucial.

This model offers customers a range of benefits and ensures convenience. First of all, it maintains a high user experience, by guaranteeing a high quality of services and customer care, and secondly, it enables easy set up of cooperation with fitness, to provide customers with very innovative solutions. The selection of suppliers in the marketplace model can be targeted to specified areas for the bank, for example only non-financial solutions, and can be easily supplemented with the bank’s own brands.

The marketplace model is used by the German bank N26 — supplementing its base offer of invoice and transaction services with investment, insurance and international transfers — and by Starling with an internal store of solutions with clickable connections.

The future of open banking

Open banking shows that building value for customers still resides in relieving them of the burden of making decisions and finding solutions for themselves. That is why the open platform model will soon lose out to the marketplace model, which carefully selects solutions shared within its own ecosystem.

Having a portfolio of solutions in the marketplace will become more and more important, and applications from the ecosystem will complement the bank’s communication. The new value will be brought by constant and appropriate selection of top solutions and services guaranteeing innovative added value. Banks will use marketplace solutions as a natural development of the customer journey, where, for example, the first investment steps can be started from Robo-advising, through education on social trading, to more complex solutions of investment tools.

The marketplace will not only complement the basic offers of small banks or challengers. It can also enrich SME banking offers, as well as those of medium and large banks, whose own products can be supplemented by innovative solutions and applications from the fintech market, serving to develop added value for bank clients.

Originally published at www.efigence.com.