Seizing the Open Banking Opportunity
IDC explains how banks and insurers in North America and LATAM must prepare for Open Banking
Open Banking is set to revolutionize the banking, financial services and insurance (BFSI) industry. Though not mandatory in North America (NA) and Latin America (LATAM), some banks are embracing open banking given its ability to deliver competitive advantage, drive innovation, and monetize data. According to this IDC research report, adopting the Open Banking standard will require banks in NA and LATAM to modernize their IT infrastructure to facilitate interoperability, incorporate API frameworks to connect with banks’ systems, and move toward a micro-service architecture that allows access to specific functionalities within the existing complex legacy applications.
In our view, to successfully transition to the Open Banking system, banks must adopt the C3 strategy:
- Comply – achieve compliance in anticipation of the regulation becoming mandatory
- Collaborate – extend banks’ offerings via third-party channels and facilitate data monetization
- Compete – leverage data to design new products, enhance existing offerings, and partner with players in the external ecosystem to create new business models