While banks are busy figuring out how to best implement and leverage Open Banking around the world, we will look ahead at what’s next for banks and financial services. Current Open Banking and API initiatives focus on un-bundling financial services, moving from a package deal of banking services to smaller, autonomous, API-enabled Banking-as-a-Service (BaaS) offers.
The logical next stage in the evolution of banking products will be a re-bundling of these API products, however, in completely new ways than banks have done in the past. In the next stage, we will likely see financial services deeply embedded in a variety of non-financial products, resulting in the long tail of more customer-centric, tailored, and relevant niche products. If enough niche products for different market niches can form, they stand a good chance to eat significant market share from today’s mass-market banking offers.
Today banks mainly compete against other banks just like them, but will increasingly face competition from players outside the financial services industry with different business models, technology stacks, and fewer regulatory constraints. What are the threats and opportunities for the financial services world?