Nationwide: Embracing Open Banking
Simon Hamilton, CTO, Nationwide Building Society
Embracing Open Banking
Simon Hamilton | Chief Technology Officer Nationwide Building Society | 05.2016
Agenda
Market Context 1
Driving Forces 2
3
Role of API Technology 4
Implications for Banks 5
Threat or Opportunity? Nationwide’s Priorities 6
Open Banking
Market Context Is Financial Services approaching an inflection point for an era of Open Banking?
• Dominated by 16 clearing Banks • 700 regional Building Societies • Emergence of mass-market products
and self service
• Increased competition leading to consolidation
• 80% of Retail Banking controlled by 5 providers
• Emergence of the internet and digital channels
• Reduced barriers of entry • Increased competition through
digital • Provision of integrated digital
experiences
Banking De-regulation & Consolidation Mass Market Banking
What’s driving the trend towards Open Banking? Driving Forces
Customer expectations Regulation
IT innovation Economics
• Digital adoption changing expectation of how and when they engage
• Expectation set by leaders across industries and solutions
• Banks still most trusted with financial data and services
• Key barriers removed for sharing of data and execution of payments
• Reduced barriers (financial and technology) for new market entrants
• IT innovation encouraged and supported
• Availability and capabilities of digital devices • Amount of data available and maturing ability to
derive meaning and value from it • Availability of APIs to connect across a broader
range of providers and solutions
• Increased competition for the customers digital banking relationship
• Quality of the digital experience provided a key differentiator
• Increased value from the digital relationship
Threat or Opportunity? Is the emergence of Open Banking a threat or opportunity for established providers?
• Increased competition to provide solutions that best meet customer needs and expectations
Customer trust?
Customer service?
Strategy & ability to execute?
• Separation from the customers digital banking relationship
• Leading to utilitisation and value erosion
• Opportunities to drive innovation for customer benefit
• Improve change agility and accelerate change
• Opportunities to create new value customers and providers
Differentiation Disintermediation
API Technology Across sectors, what role does API technology play?
IT Innovators
• APIs a fundamental part of how the leading IT innovators do business and create value
• They drive how services are provide and change is delivered; Platform service models
• Entirely new business models have emerged through their exploitation
Retailing
• In other sectors such as Retail, leading providers have embraced API technology to drive e-commerce
• Whole product catalogues opened up through APIs
• The growth of the ‘everything retailer’
Banking
• Underpinning the emergence of digital Neo-Banks
• Established leading providers embracing APIs within their technology and business strategies
• API standards emerging to facilitate a step-change in API exploitation
Implications for Banks What does Open Banking really mean for Banks if they are to succeed?
Creating a compelling digital banking experience
• Be the best at enabling customers to pay, access accounts and services, manage their money and get help and support
• Maintain trust and be first for service; digital and physical
Working and integrating with the digital ecosystem
• New, more open approaches to innovation and partnering
• Banking as-a-platform: Connecting to and exploiting a broader range of digital solutions
Moving beyond traditional Banking
• Go further in helping customer get more value from their money and relationship with you
• Look for new value opportunities; for customers and for the business
Nationwide’s Priorities What are our immediate priorities?
1. Operationalising the API technology
• The technology
• The business and governance model
2. Delivery against priority requirements; Regulatory and non-regulatory
• PSD2 a priority
• A roadmap of other opportunities
3. Maturing our broader strategic response to Open Banking
• Business strategy-led
Thank You
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