One of the added benefits to Open Banking is the fact that we now have a public Source of Truth (SoT) for bank products (under the Products API). It's not perfect as banks will only ever do the minimum required by any regulations. But it is certainly enough to be useful.
Your own Product Source-of-Truth
In order for the banks to publish all this data on their products probably means, based on how big and complicated most banks are, that they would need to compile all this information from a variety of internal systems and data repositories. Not necessarily an easy job, both to compile this information and to maintain it's accuracy.
But now that the banks have a central repository with all their product data, it's guaranteed to be up-to-date, and in a computer-software-friendly format (JSON), then possibilities open-up as to how they can use this data within their own internal systems. In fact it can be treated, for business purposes, as a single SoT database; an enterprise super-database where all the disparate data is in the same format and in a computer-readable format.
This has many advantages:
- It allows automated processes to use a single source for the data required by these processes, and in a format conducive to their operation;
- It means that customer facing documents or web-pages can be created (manually or via processes) from a single source, thus reducing errors or coordination issues;
- Open Banking required the bank to build the SoT. Costs are sunk. Use it to your benefit;
- It creates a standardised source of data throughout the enterprise to be used in communication with colleagues and decision-making (silos are eliminated);
- Most importantly, both the bank and it's customers are using the same data from the same source.
Product comparisons
For the first time, the banks now can create comparisons between their products and other banks. There was no reason they could not have done this before Open Banking, but it would have been put into the 'too hard' basket. For example, mortgage brokers became a massive industry because they gave the customers what they really wanted: aggregated mortgage data from lots of banks so consumers could do side-by-side comparisons of the loan products. There is no reason why banks couldn't have done this themselves. But they didn't due to many factors with one major factor being that the bank could not guarantee they had the right information from their competitors, and thus open to liability/risk issues.
Open Banking facilitates the creation of comparisons between banks because they now all have correct, up-to-date, and managed data in a format they can use. They don't have to search their own systems or other competitors for the data. It's there in Open Banking and it's public. And if the data is wrong, then it cannot be the fault of anyone to use that incorrect data; it is incumbent on the banks themselves to make sure it's Open Banking data is correct.
Although banks have always understood the products of their competitors to a certain degree, Open Banking allows the bank to use it's own and others SoTs to automate the analysis of their competitiveness in a real-time basis. Reports can be generated on a (say) weekly basis which can be disseminated to their branches as marketing or promotional tools.
Banks need to think of the consequences of Open Banking
Open Banking will get us to the point where a consumer will be able to refinance their loan on a button click. What the banks should be fearful of is that the consumer, due to the wealth of information they receive, will use some cashed-up financial tech company's refinance button as opposed to their own button. What they don't want is to cede the same power they did with the mortgage brokers. Using their own and the other banks Product SoTs to the maximum effects can assist these efforts.
Eric Handbury
DBUpdate.net
https://www.dbupdate.net
dbupdate.net@gmail.com
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