Traditionally financial industry protected the customers’ personal, financial and transactional data. This was a great entry barrier for players like new financial institutions and fintech companies. However recent changes on regulatory horizon, including implementation of Farrell Report in Australia, Payments Services Directive (PSD2) in Europe and Open Banking Implementation Entity (OBIE) in UK, are set to break the barriers in 2020. The rest of world, including USA banking industry is following the suite.

Open banking will accelerate banking industry disruption as any third party can have access to specific customer data - post consent. All players, including financial institutions, fintech, will have access to the same data. Hence every player will try to derive the same value from the same data using data analytics. This might result into redundant investment and redundant information processing.

The primary motive behind ‘Open Banking’ concept is to positively impact customers’ financial activities. This can be achieved by providing recommendations or insights based on real time data analytics. Few other secondary motives are to introduce additional revenue streams for financial institutions, reduction in operational expenses, and minimizing capital expenditure in terms of technology correction. Nevertheless, various financial institutions are working towards the same goal and exploiting crucial budget and resources behind Open Banking data analytics resulting into undermining the primary and secondary motives of Open Banking.

Financial institutes like banks, payment providers, credit rating agencies face threat in terms of falling behind more technologically advanced competition. The crucial point to note here is that, Open Banking does not mandate financial institutions to share all the details. Financial institutions should reposition on the ‘Open Banking’ battlefield leveraging data analytics specifically on confidential data in order survive this disruption. Financial institutions can leverage the opportunity to participate and benefit from the change by providing deeper and actionable insights based on the data which is not available on Open Banking Platform. Financial institutions can analyze the necessity of new partners, opportunity, challenges and implications of this new data driven ecosystem. Financial institutions should understand the value of historical and confidential data available using data analytics to create their own rocket engines. And later use Open Banking platform analytics as power boosters.

This new battlefield requires financial institutions to adopt new vision, new strategies, new partners and focused approach around data analytics.