The Open Bank
We’ve been thinking recently about a new form of financial services, which for the time being we are referring to as the Open Bank. This post is intended as a brief summary and strawman of our thinking to date.
The old model of financial services is increasingly out of kilter with the technological pace of change and the way the networked economy and society are evolving We think there is scope for radical rethinking and restructuring of the banking business model so that is open on these 3 levels:
- Open with customers so they can co-create new products and services with them and provide data driven responses to specific lifestyle and financial circumstances
- Open with systems and suppliers so they can find, integrate and scale innovative new products and services – better, faster and cheaper
- Open with their operations and values which drives greater accountability and ultimately a more trusted and responsive bank to the needs of their customers and the economy.
These three levels are all obviously interdependent and we believe that the Open Bank would ultimately not only find the need, but also implemented the solution and get the kudos. A few examples of companies/projects starting to make inroads into this space include the following:
- Transferwise and Currency Fair with their disintermediation of the money transfer market place
- Open Bank Project with their bank as a platform, transparency as an asset positioning
- Zopa with their disintermediation of the loans market place
- Cooperative Bank (notwithstanding it’s recent downgrade and decision to float) with their mutual structure and customer-co-created ethical policy
- RBS with their initial foray into crowdsourcing with their Ideas Bank
- Square and iZettle with their democratisation of the mobile payments infrastructure
- Barclays with their Pingit platform and crowdsourced community powered credit card BarclayCardRing
- Goldman Sachs with their 10,000 Small Businesses programme
- Chirp.io with their novel technology to shift data/money via sound
- Bank of America with the Keep the Change initiative
- L39 and FinTech accelerators of new financial services start-ups
- Capital One with the opening up of their own API
- Swift with their Digital Asset Grid and Vocalink with their Faster Payments system
What have we missed and who else is doing interesting work in this space? And what do you think an Open Bank could and should look (and feel) like? As ever, we’d be interested in your comments.
David and Roland
By Roland Harwood, Jun 18, 2013
Interesting article guys but I would take the Co-op out of this. Yes, it has been at the forefront of the ethical finance movement (in terms of size and mainstreaming if not innovation per se) but its mutuality is increasingly questionable, especially if it’s proposed investment-to-shares approach to recapitalization goes ahead. Don’t get me wrong, the latter is an interesting step in terms of co-ops potentially recognizing all of those stakeholders who put something in to the business but this proposal in its current form conflicts with the member owned nature of a mutual by one group preferential treatment and access to decision making over others (If co-operators are loathed to accept John Lewis as a co-op because of the safety net providing golden share of the Lewis family then why this?). It strikes me that the Co-op Bank is an organisation in turmoil but that probably provides you with the gap in which your open banking ideas could be developed. Good luck with it and hope my two-penneth is helpful food for thought.
Roland –
Great post. What you are pointing at is that tremendous pressure that is building up to disrupt retail banking, given the inability of banks to respond to customers (both in terms of infrastructure and in terms of culture) and the market failures which existing banking models created. New banking, is, I think, inevitable.
Two players which could justify a place on your list are:
Simple (https://simple.com): the attempt to create a bank which is designed with and for customers as a service, not a suite of products.
Dwolla (https://www.dwolla.com): a payment service designed to bypass existing bank-to-bank infrastructures to enable account-to-account payments in real-time much more cheaply and transparently.
Both, alas, are US-based, but I am sure that if successful, their models will export…
Thanks Rob. Yes agreed and good insights. As a co-op customer myself personally and as a business customer at 100%Open we’re keeping a close eye on what they are up to as well.
Mike – thanks. Glad you liked it. (It was mostly written by David btw). Thanks for the two additions to the list. Really like both and thanks for sharing. Hope all is well with you.
All the best,
Roland
thanks Rob I’m afraid I’m completely pro the Coop if only for the fact that their ethical policy is member sourced. what other clearing bank would dare?
thanks Mike for those new examples, really interesting. plenty of good banking ideas coming from the US at the moment so maybe we’ll see them here soon!