In my day job as Head of Open Banking, my responsibilities include not only delivering on PSD2 compliance but also seeking out opportunities for innovation in corporate banking products. This means I encourage my team to engage with our sales people and to meet with the corporates to find out what they want. And in the past twelve months, I’ve seen these conversations undergo a big change.
In what way? Well, a year ago Open Banking was hardly on most corporate treasurers’ radar. But today when Open Banking is mentioned, their eyes shine with anticipation. And this isn’t happening just with corporate treasurers of heavily tech-orientated companies, but across all sectors.
The difference this year is that they’ve picked up on the potential for Open Banking to make their processes more efficient. In short, they’ve seen an opportunity to use it to tackle the classical cash management challenge: how to save time and money by moving instructions and information automatically between systems.
Given the pressure that corporate treasurers are under to streamline their operations and bear down on costs, it’s a no-brainer. You don’t have to be a technology whizz to understand the advantages of API-enabled sharing of data across applications: no more sitting down in front of a bank’s electronic banking system, writing down the numbers, and then moving to another screen to input the data into a cashflow forecast.
Given this opportunity, it’s hardly surprising that process efficiency is the main focus of corporates’ rising interest in Open Banking. And helping to meet this need is a natural offering for a bank like ours, which has been assisting them in solving their cash management challenges for decades.
But in reality, this is just the first of several waves of change that Open Banking will bring for corporate banking services. The next, bigger wave will consist of a new generation of products and services that deliver benefits well beyond process efficiency—by using APIs as the glue to integrate traditionally separate offerings in new ways, creating more comprehensive solutions that meet corporate treasurers’ needs faster, better and more cost-efficiently.
What will these more comprehensive solutions look like? They’ll include API-enabled integration of data and services in formerly siloed product lines like cash management, capital markets and financing. Some forward-thinking and generality tech-savvy corporates are already partnering with us to combine our APIs with their own processes to reach a new level of digitalization. Going forward, these API-powered partnerships will widen to include non-financial services in ways as-yet undreamt of—but that’s still some way off.
Closer partnering between banks and corporates will become a key feature of the Open Banking-driven world. New solutions developed on top of the base layer of RESTful APIs can be delivered faster and cheaper than before, opening up for a far more productive approach where we team directly with our corporate clients, and innovate with them to create tailored and customized solutions.
As these types of collaborative bank/corporate solutions advance beyond process efficiency, they’ll increasingly use Open Banking to help the corporate partner serve their own customers better—positively boosting revenues for both corporate and bank. While there are many opportunities for banks to do this, currently the most attractive are through collaboration with their large business-to-consumer (B2C) customers.
By teaming up with a B2C corporate and co-create tailored APIs, a bank can integrate its own offerings into the corporate’s consumer apps, and reach all of its customers with banking services that are relevant to their needs at the moment of purchase. Through a handful of partnerships like these, a bank could reach many millions of new customers.
Such opportunities represent just some of the benefits springing from banking innovation enabled by Open Banking and APIs. And in sustaining innovation, standardization and regulation can be double-edged. In my view, standardization is usually the opposite of innovation: it’s something that happens at the end of the innovation lifecycle in a given market, when advancing commoditization starts to erode differentiation between providers.
However, we’re currently in the early days of the API market, where the opportunity for differentiation is the driving-force behind innovation. That said, in some non-differentiating areas—such as security and authentication—standards are useful, and I feel it’s a shame that the regulators were not clearer on these aspects when framing PSD2. But there’s balance to be struck: in some other areas, such as SEPA payments, the regulators have gone too far in imposing standards, hampering differentiation. And if companies can’t differentiate, they won’t innovate.
A further key factor driving innovation in an API word is openness. Here at Nordea we’re one of the most open banks anywhere: our super-transparent approach has included opening up our Developer Portal (nordeaopenbanking.com) for anybody to access (or even copy) what we do. Our mantra is “be my guest”—because we know we won’t win in the Open Banking game by keeping our innovation secret or being exclusive, but by innovating faster and better to stay ahead of the rest.
This is why today is such an exciting time in corporate banking—certainly the most exciting I can recall. Open Banking and APIs are already having an electrifying effect on the corporate banking market, and it’s only going to get bigger. So, here’s to innovation—wherever it takes us.
This is the third article in our payment series. Other articles include:
Gunnar is heading a Nordic unit responsible for ensuring PSD2 compliance and proactive-ly embracing the opportunities for more innovative development and 3rd party collabora-tion based on open banking. Gunnar’s goal is to make Nordea’s Open Banking Platform the go-to hub for financial APIs in the Nordics, where customers, 3rd parties and banks can meet to exchange data and co-create more comprehensive and value-adding solutions. Gunnar has a long history working in the banking industry, especially with complex cus-tomer cases and development initiatives.
Anders is Payments Leader at Finastra. His professional career includes similar leadership roles at D+H and Fundtech as well as sales and solution roles with IBM and LogicaCMG. He has over 20 years’ international business experience with deep technology, transformation and outsourcing experience, delivering successes for customers across their retail, wholesale, cash management and payments businesses. With meeting customers and speaking engagements across EMEA – European Central Bank 2019, Seamless Payments 2019 and Efma 2018 – he is always on the move. He is a passionate people leader who encourages his team to think differently. He holds a masters degree of Economics from Lund University as well as a master degree in business administration from Umea University. Follow Anders on Twitter.