Open Banking is a Game Changer for Millennials, New Survey Finds

Most bankers believe open banking will have a dramatic effect on the market structure and competitive environment for consumer banking services. Nearly 90% believe that Millennials will be using banking services from a variety of providers that are accessed through a single aggregation portal, significantly impacting the relationship banks currently enjoy with their customers.

Earnix, a leading provider of predictive analytics solutions for the financial services industry, today announced results of a survey conducted in January of 300 UK and European bankers focused on how open (API) banking will affect their business, and their ideas on how they will need to adapt to the new competitive landscape.

Banks Will Need to Overhaul Their Pricing and Value Models

Open banking is part of the Payments Services Directive 2 (PSD2) that comes into effect in January 2018. It requires financial institutions to make customer data available to third parties, enabling customers to construct hybrid services from a variety of providers. 72% of the bankers surveyed think that this will significantly diminish their existing customer relationships, making it more difficult to cross-sell financial services. Given this, 75% think that their bank will need to overhaul their pricing and value models to maintain market share.

Analytics and Machine Learning Will be the Most Powerful Tools to Win Customers

Bankers almost unanimously (93%) believe that open banking will bring a deluge of new customer data that will revolutionize how analytics will be used to create more customer-centric financial services. 73% believe that predictive analytics and machine learning will become the most powerful means through which to win bank customers over the next five years.

Commenting on the survey finding, Earnix CEO Udi Ziv said: “Open banking is a game-changer for the financial services industry. Traditional banking services will be redefined, becoming more personalized and customer-centric. We believe that incumbent banks have a unique opportunity to excel in this new environment, and we are helping them deploy advanced analytics that leverages the gold mine of customer data they already have.”

To download the full report and infographics go here.

Summary of key data from survey:

  • 80% of bankers expect a significant increase in competition over the next five years as a direct result of open banking
  • 88% believe that most millennials will be using banking services from a variety of providers that are accessed through a single aggregation portal
  • 72% of bankers think open banking will significantly diminish their existing customer relationships, making it more difficult to cross-sell financial services
  • 75% of bankers think that their bank will need to overhaul their pricing and value models to maintain market share
  • 93% of bankers believe that open banking will bring a deluge of new customer data that will revolutionize how analytics will be used to create more customer-centric financial services
  • 73% of bankers believe that predictive analytics and machine learning will become the most powerful means through which to win bank customers over the next five years

Author: Dylan Jones

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