The last few decades have seen the financial industry slowly incorporating Internet-based technologies to open up new distribution and operational channels. Digital banking allows customers to access almost all financial services from anywhere, at any time.
Banks, however, are still offering essentially the same products and services as they did in the past. Compared to other industries such as entertainment, travel and retail, banks are not yet using these channels to actually change their business model or propose new and more relevant products or services. A few bells and whistles aside, the banking industry has yet to be truly disrupted.
At the same time, banks are in a uniquely privileged position to take the financial industry where it’s never been. However, they are under a lot of pressure to do so before the giant Internet companies beat them to it. Moreover, banks are facing a wave of unprecedented competition from an emerging set of pure FinTech players.
THE DATA REVOLUTION IS HERE
What banks have in spades is reliable, quantifiable, and best of all, monetizable, data. Unfortunately, banks largely lack a culture of Internet innovation and the agile, quick-to-market IT organization that forms the DNA of FinTech startups and Internet giants.
Living in a world of interconnected systems in which real value comes more and more
SO, HOW CAN BANKS BEST LEVERAGE THEIR DATA ADVANTAGE?
from data itself, banks must open up and offer well-structured and secure APIs on top of
which third-party innovators can develop the next generation of financial solutions. The FinTech application development community is endlessly creative and agile.
Through data APIs, tech companies, banks and their customers will all benefit from an increasingly valuable ecosystem of innovative solutions. This new approach not only generates new revenue streams, but more importantly enables banks to lead the coming disruption of the financial services industry. A forthcoming article will describe how banks can open their data to create a productive innovation ecosystem together with third-party players.
This post has been submitted to The FINTECH Book, the world’s 1st globally crowd-sourced book on FinTech.
Readers that enjoyed this initial abstract are invited to like and share on Medium so that the full version may be published in The FinTech Book, due to be released in November 2015.