The ongoing digital revolution in the banking industry is causing customer needs to shift at the speed of light and expectations to constantly increase. Traditional banks, on the other hand, started to fall short of meeting these great expectations by keeping up with this rapid change. While traditional banks should focus more on individual customer needs by using the power of new-generation innovative technologies like AI, they are still trying to provide financial services to many different segments with similar offerings.
Financial institutions that are not adapted to the new digital world have increasingly faced competition from swiftly growing technology companies and digital banks, also known as neobanks. At this point, visionary financial services companies realized that joining forces could bring them huge amounts of benefits because now the expectations of customers are highly integrated and far ‘beyond banking’.
What is Beyond Banking?
In short, Beyond banking is the cutting edge of ecosystems in the banking industry in terms of service delivery. It has emerged as an effective way to create a competitive advantage in the evolving digital financial services world.
Beyond banking, like open banking, is a platform-based banking approach. This platform consists of an ecosystem where different service providers come together. And through this ecosystem, customers are provided with a consistent and integrated service set that goes beyond banking services.
It works by leveraging open APIs to quickly and easily send data between information systems of various services using standard data exchange protocols. Thus, it becomes easier for new generation financial service providers to offer new solutions to the market within a living ecosystem, and at the same time, the costs and development processes of financial institutions are accelerated by using these new solutions.
The Difference Between Beyond Banking and Open Banking
In fact, both beyond banking and open banking are ecosystems shaped by the evolution of online banking and the emergence of digital service providers of different sizes in the financial industry.
The open banking ecosystem includes fintech startups, customers, third-party developers, and partners. In this structure, data, processes and business functions are made available on a platform-based basis and the services offered are purely financial services provided by third parties or banks. In the beyond banking ecosystem, the services offered can be of any type. Thus, beyond banking brings a much broader perspective to the open banking approach.
Beyond banking, in fact, offers a broad perspective that will enable the spread of online financial services, which have increased rapidly with open banking, to all areas of daily life in a meaningful way.
Beyond Banking Opportunities for Financial Institutions
Beyond banking gives the banking sector the opportunity to create more value for its consumers and paves the way for revenue increases that will outweigh the negative effects of the pandemic. So let’s now dive more into the benefits and opportunities that beyond banking provides to the finance industry. Let’s take a look at some of the most striking opportunities together.
Trust is the golden key in financial services. Housing is an issue in which banks are already actively involved in loan services. On the other hand, the housing ecosystem, which includes many parties such as mortgage providers, movers, contractors and real estate agents, is an important market, growing globally, and banks can position themselves more actively.
Therefore, it is possible for banks to partner with parties such as agencies and real estate agents with the beyond banking approach to manage their customers’ housing journey end-to-end, and earn income from business items such as moving or home insurance, in addition to just taking part in house sales.
In a beyond banking ecosystem, banks can even offer their customers a seamless travel experience. Customers can make their reservations through the bank, and during the trip, the bank can help their budget by determining the right exchange rate for the customer.
At the same time, open APIs can help digital identity providers securely and quickly access customer identities through banking platforms, enabling even passport-free travel. From this perspective, the opportunities seem endless.
Financial Health Management
Financial issues are a major source of stress for many people and institutions. In order to reduce this stress, everyone expects support from banks. In this sense, money management seems to be a feature that banks should add to their mobile applications by collaborating with fintechs.
Enabling customers to manage their assets better by making much more rational decisions and creating meaningful and valuable interactions in this process will definitely increase the reliability and power of a bank in the perception of customers.
Banks need to be able to adapt to this change in the financial services industry as early as possible. In order to meet in common ecosystems and join forces with many different third parties, they should not only expand their vision but also strengthen their infrastructure with forward-looking technological innovations and invest in the future. Only in this way can they be the pioneers of the digital transformation process and follow the growth trend by carrying their assets into the future.