Martin Sladecek, Open Banking Manager, Komercni banka
How will the increased use of open APIs shape the financial services market, and how will it impact different market players in both the short- and long-term?
In the short-term, banks with available APIs will be the only market players who will be able to practically use third party licensing. Banks will open their APIs to one another, and the result will be improved competition and better value for customers. There are two possibilities to come from long term perspective. Banks will either act as a commodity player and play the part of supporting the third parties with commodity and basic services, or there will be significant mutually beneficial partnerships developed between banks and fintechs. In both cases, there will be new services popping up that will improve the customer experience. Three years ago, there was major opinion there will be strong competition between banks and fintechs to beat out one another, but that is no longer the case. Taking that innovation out of the market would be damaging for business profitability and the consumer. We recognize now the combination in mutual partnerships is the holy grail of the market and especially from the point of view of customer.
Which activities should banks be prioritizing?
The first steps are to be prepared, and to be flexible. I see the industry divided into two groups: the big players with established but often old-fashioned core systems and IT infrastructure, and the new purely internet banks focused mainly on small products for their smaller market share but with up to date environment in place. The incumbent banks face a huge challenge in delivering new services with their existing infrastructure, as the time to market is long and costly. We need to improvise to adapt with innovation and come up with new agile methods to create product offerings faster and cheaper. Preparing pilot API services should be the first priority, and we should be thinking about more ways to use API services going forward on top of PSD2, as well as to combine them with aggregating information to create ultimate value proposition to our customers. Banks should focus on value-added services, do market researches, scans, client tests and pilots to find the most relevant products to offer to third parties and to satisfy all various clients.
What opportunities does Open Banking present, and which commercial strategies will thrive?
The coming revolution is the biggest in the financial industry since the advent of digital banking, and nothing is going to look the same a few years from now. Banks will be open to interact with each other and third parties, and third parties will build services along the legal requirements provided by APIs. The world will be much more connected through these new opportunities to interact, with none of this ever possible before. There are four general directions banks could go through the provisioning and aggregation of API services. First, we can just achieve the bare minimum compliance requirements. We can move beyond that and expand our offerings to act as a third party and compete by offering clients the possibility to connect all other bank accounts through our digital channels. Or we can provide various Open Banking API services on top of PSD2 level to engage more third parties in mutual services for our clients. BUT, the leaders in digital banking are combining expansion in rich API services offerings and competition as a third party to achieve disruption. By building your business model around these, you will have the capability to act as the one-stop-shop, let your clients use seamlessly third parties in your phygital environment and to extend your services making them accessible through new third parties’ applications as through your new channels.
How can firms overcome security concerns associated with data sharing?
As a bank, our first step must be to educate our clients and lead them in recognizing secure and trustworthy third parties to interact with their data. But in parallel, we must secure the technology we rely on for our high security standards. In the Czech Republic, Komercni banka is recognized as a trustworthy and reliable brand because we are actively protecting our clients and their data, and this puts us in a strong position it in the market. It is the essence of banking – the trust. And that is why we are highly cautious in data sharing and we do that ONLY based on direct client requirement.
What are the best strategies to encourage customer engagement?
Currently, we’re seeing positive moderation: finding free space or unfulfilled demand on the side of our customers. Banks have limited resources, so we may not be able to serve every need of every one of our clients. By uncovering microsegments of client needs, we can combine third party services and bank services to reach everyone. Now we can reach our users on a new level by meeting these demands, being a trustworthy brand and stressing our values.
Why are you speaking at Finance Edge’s Open Banking Summit, and what do you hope to get out of the event?
I’m looking for inspiration and fresh ideas through stories from my peers and the other participants. Ideas are cheap – the challenge is in the execution. As an industry, we have to overcome the fear of sharing ideas to create the innovation we’re all looking for. I’m proud to be a speaker to share Komercni banka’s vision in Open Banking, our own stories and be a part of such a key event to discuss developments in Open Banking, APIs and PSD2.
Open Banking Summit
25 April 2018 London
Martin Sladecek will be joining us for the Open Banking Summit. This high-level, interactive forum will bring together senior-level professionals from all corners of the open banking space.
CONTACT US to secure your place