Nearly 90% of bankers believe that millennials will be using banking services from a variety of providers that are accessed through a single aggregation portal, significantly impacting the relationship banks currently enjoy with their customers.
Earnix, a provider of predictive analytics solutions for the financial services industry, today announced results of a survey conducted in January of 300 UK and European bankers focused on how open (API) banking will affect their business, and their ideas on how they will need to adapt to the new competitive landscape.
>See also: Open banking: a financial revolution?
Indeed, 80% of the bankers surveyed expected a significant increase in competition over the next five years as a direct result of open banking.
Banks will need to overhaul their pricing and value models
Open banking is part of the Payments Services Directive 2 (PSD2) that comes into effect in January 2018. It requires financial institutions to make customer data available to third parties, enabling customers to construct hybrid services from a variety of providers.
Of the bankers surveyed, 72% thought that this would significantly diminish their existing customer relationships, making it more difficult to cross-sell financial services. Given this, 75% think that their bank will need to overhaul their pricing and value models to maintain market share.
Analytics and machine learning will be the most most powerful tools to win customers
Bankers almost unanimously (93%) believed that open banking will bring a deluge of new customer data that will revolutionise how analytics will be used to create more customer-centric financial services.
>See also: Rise of the collaborative open bank
While nearly three quarters (73%) predicted that predicative analytics and machine learning will become the most powerful means through which to win bank customers over the next five years.
Commenting on the survey finding, Earnix CEO Udi Ziv said: “Open banking is a game-changer for the financial services industry. Traditional banking services will be redefined, becoming more personalised and customer-centric. We believe that incumbent banks have a unique opportunity to excel in this new environment, and we are helping them deploy advanced analytics that leverages the gold mine of customer data they already have.”
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