IT S NOW OPEN BANKING

Transcription

1 Accenture Open Banking for Buinee Survey 2018 IT S NOW OPEN BANKING DO YOU KNOW WHAT YOUR COMMERCIAL CLIENTS WANT FROM IT? WINNING IN THE DIGITAL ECONOMY SERIES

2 The momentum of Open Banking ha been around retail banking conumer. Conumer get hyper-relevant, alway-on banking experience that they have come to expect. But what about commercial bank cutomer and their expectation? We aked 660 commercial bank cutomer about uing Open Banking to win in the digital economy, and they gave u an earful. For example, 40 percent of large corporate and 31 percent of mall buinee already participate in Open Banking ecoytem platform. Bank have a unique, but brief, opportunity to help buinee optimize Open Banking and API innovation for an expanded ecoytem and extended reach. Bank that do can bolter thee relationhip and grow revenue. Before that can happen, however, bank mut know and meet the Open Banking need of commercial cutomer better than hungry competitor that want in or are even already in. 2

3 THINK OPEN BANKING FOR RETAIL IS BIG? COMMERCIAL WILL BE BIGGER A retail hopper in Spain could finance a purchae uing a loan from BBVA by clicking the loan button embedded in the retailer checkout creen. 1 Citi cardholder in Hong Kong will oon be able to offet their online purchae immediately upon checkout at EGL Tour uing their reward point without ever leaving the hopping platform. 2 Uing the Capital One Bank Account Starter API, a wedding regitry can enable it cutomer to open a aving account quickly, eaily and ecurely on it ite that can act a a ecure repoitory for monetary contribution. 3 Thee are jut three example of how Open Banking, a platform-baed buine approach, i already rehaping the retail bank cutomer experience for retail conumer. It i et to do the ame and even more for commercial banking. A bank become innovative data trader with third-party provider (TPP), mall- and medium-ized enterprie (SME) and larger corporate tand to gain Open Banking olution that both improve the way they operate/interconnect their finance and expand their ecoytem. And corporate are already preparing for it. We recently polled 330 mall buinee, 330 large corporation and 100 global bank acro 11 countrie to ae their perpective on and prioritie for Open Banking in the corporate ector. Thirty-five percent of the SME and large corporation already participate in Open Banking ecoytem platform, and another 42 percent plan to do o next year. Their top-two motivation: gaining acce to innovative banking ervice (27 percent) and extending their market reach (22 percent), a hown in Figure 1. There i no hortage of opportunitie for Open Banking innovation to benefit corporate. U.S. Bank, for example, i placing it Account Payable Optimizer app inide the Sage Live accounting platform, providing cah flow analyi to help Sage SME cutomer in the US and Canada maximize their working capital and manage their cah flow in near real-time. 4 1 Buine Inider, BBVA put it open API into the wild, May 25, Citi, 3 Capital One DevExchange, 4 Small Buine Trend, U.S. Bank and Sage Announce AP Optimizer to Streamline Invoice Payment, July 28, mallbiztrend.com/2016/07/age-partner-u-bank-cah-flow-tatement.html 3

4 Figure 1. Corporate expect Open Banking to give them greater banking acce and a larger reach What are the mot ignificant benefit to your organization of uing an Open Banking Ecoytem platform? (%) GLOBAL NA EUROPE APAC To gain acce to convenient and innovative banking ervice To allow u to reach more client and partner To optimize efficiency of SME and corporate procee To reduce complexity and implementation cot for bank connectivity To reduce the cot of client acquiition My organization doe not ee benefit to uing an Open Banking ecoytem platform Note: N=660 Source: Accenture Open Banking for Buinee Survey

5 A Open Banking gain traction, o will it ue cae for commercial bank cutomer Pro-competition regulation coupled with digitization i welcoming new entrant into banking and other financial ervice. Though Open Banking i making fater headway in the competition-friendly U.K. and PSD2 in the E.U., it i gaining traction around the globe Aia, Autralia, North America and other and creating opportunitie for buinee, initially around account- and payment-related function (Figure 2). The hift i inviting new entrant and booting cro-indutry ecoytem platform play which benefit commercial buinee cot efficiency and market reach. Fundamentally, Open Banking trigger a decoupling of ervice ditribution from production. The rik for bank i that they remain bound to the production ide, providing baic function while newcomer, like fintech and non-bank firm, operate a over-the-top provider, looking to intercept the larget hare of value. Should regulatory-driven action allow fintech and non-bank to take cutomer, ay in the profitable lending and foreign exchange ervice buine, bank rik loing their competitive advantage of being their client primary partner and being reduced to the role of a commodity product provider. Figure 2. Payment and account are key in the firt wave of Open Banking globally TYPES OF SERVICE OPEN BANKING UK PSD2 NACHA* MEXICO HKMA** SINGAPORE AUSTRALIA NEW ZEALAND PAYMENT INITIATION PAYMENT STATUS PAYMENT ACCOUNT INFORMATION PRODUCT INFORMATION PRODUCT OPENING FRAUD & RISK REDUCTION CUSTOMER INSIGHTS CREDIT SCORING OTHER DEPOSIT ACCOUNTS LOANS INSURANCE Regulation and API exiting (CMA) or in September 2019 (PSD2) Regulation, Government- or Market Initiative to provide firt API in More traditional cope of regulation * NACHA API Standardization Group initially plan to publih API on Payment, Account Information, Account Validation / Tax Payment ** HKMA Open API regulation initially plan to puh for API on Product Information, Product Opening an later on Tranaction, Account Information (bank, loan, mortgage, credit card ) 5

6 INDUSTRY PLAYERS RECOGNIZE THE OPPORTUNITY TO ENHANCE THEIR CORPORATE RELATIONSHIPS Both incumbent bank and digital newcomer are recognizing the value of Open Banking to commercial entitie and to their bottom line. More than 90 percent of bank in our urvey ee Open Banking for SME and large corporation a a key trategic initiative in their digital tranformation program. More than 85 percent have already inveted in Open Banking for commercial client or plan to do o in 2019 (Figure 3). Mot plan to invet up to USD$20 million each to undertake initiative uch a building Open Banking platform, offering TPP ervice and exploring ue cae. Importantly, half of bank expect five to 10 percent of their revenue growth to come from Open Banking for commercial cutomer (Figure 4). Figure 3. Bank are already inveting in Open Banking for commercial cutomer When doe your bank plan to make invetment in Open Banking for SME and Corporate cutomer? (%) GLOBAL 46 NA 46 EUROPE 46 APAC Have already inveted in 2018 We plan to invet in 2019 We plan to invet in 2020 We plan to invet in 2021 We plan to invet in 2022 No immediate plan Note: N=100 Source: Accenture Open Banking for Buinee Survey

7 Bank in Europe (77%), North America (72%) and Aia (61%) plan to invet up to USD$20 million each to undertake Open Banking initiative for commercial cutomer. Bank aren t alone. Nimble digital newcomer, like LendingClub, Kabbage and Tide, are alo eager to engage with the ecoytem. They are already taking advantage of Open Banking innovation to woo banking buine at commercial entitie. They are uing real-time data to offer more cutomer-centric bundled olution on eamle platform-baed ecoytem that interact with bank where neceary. Take Xero, one of the world larget cloudbaed SME bookkeeping ervice provider. It ha more than one million client worldwide and offer a range of platform-baed ervice for SME, including view of cah flow in realtime, online invoicing of cutomer and nearintant reconciliation of bank account. 5 Figure 4. Half of bank expect Open Banking for corporate to drive five to 10 percent of their revenue growth What percentage of banking revenue growth doe your bank expect to derive from Open Banking for SME and Corporate client over the next 3 to 5 year? (%) GLOBAL NA EUROPE APAC % growth Le than 5% growth Between 10% and 20% growth More than 20% growth Between 5% and 10% growth Note: N=100 Source: Accenture Open Banking for Buinee Survey Xero, 7

8 Many of thee ervice are provided by other TPP, uch a TranferMate and Square, that operate on the Xero platform (Figure 5). With Open Banking, the competitive poition of Xero and other imilar player will expand further into the commercial banking value chain. Fintech and ERP oftware provider, like Stripe for online payment proceing and SAP for cah management-erp integration, are looking to help corporate gain greater efficiencie in payment. One example i AribaPay, a payment ytem developed by SAP and Dicover Financial Service that operate on the SAP Ariba network and i deigned to bring a conumer-like experience to B2B payment. 6 The advent of Open Banking will quicken thi trend. Still, bank have a ditinct advantage: tronger trut bond with their commercial cutomer built on a heritage of data ecurity and privacy. In fact, 68 percent of companie globally would prefer their bank to provide them an Open Banking ecoytem (Figure 6); 55 percent (71 percent in North America) would want to partner with a payment TPP. And only 45 percent of companie are fully atified with their organization buine oftware with regard to payment and banking. Figure 5. Digital newcomer Xero relie on an API-integrated ecoytem of partner to create value for SME Marketing & Offer Inventory & Order Mgmt Checkout & Receipt Payment T Fulfillment & Delivery Cutomer Service FRONT-OFFICE FRONT-END BACK-END BACK-OFFICE V V T Analytic Merchant Sale & Boarding P Integration & Capture Gateway Proceing Scheme Acquiring Aggregating Servicing VAS Practice Ignition Vend Square Tranfer Mate Tallie Stripe API Xero P T Practice Ignition Tranfer Mate V Square Vend Stripe Shopify T Tallie Source: Accenture 6 Ariba, 8

9 Incumbent can draw on their till-preferred poitioning to help corporate improve the way they manage their buine (particularly working capital) by eaily and quickly acceing their banking information acro multiple banking relationhip and initiating tranaction on a real-time bai from multiple ource. Bank can then ue thi extra data to credit core and analyze their commercial cutomer more effectively, reulting in better outcome like more accurate lending, pre-approved loan amount and dynamic loan pricing. Yet, often hindering bank competitivene i a diconnect in truly knowing what commercial bank cutomer want. Traditionally, bank could get away with telling corporate what they were going to ell them and when. Open Banking i tripping away thi unique protection and bank mut adapt. Figure 6. Companie prefer to join Open Banking ecoytem with their bank Would your organization be more intereted in joining an Open Banking ecoytem platform with your bank or a non-bank? (%) GLOBAL 11 NA 19 EUROPE 12 APAC Ye, we d be more intereted in joining Open Banking ecoytem platform with bank We don t have any preference Ye, we d be more intereted in joining Open Banking ecoytem platform with a non-bank technology provider (e.g., SAP, Ariba, Coupa, Oracle, Xero, Intuit) Our organization i not intereted in joining any from Open Banking platform Ye, we d be more intereted in joining Open Banking ecoytem platform with a non-bank fintech company or third-party provider (TPP) Note: N=660 Source: Accenture 9

10 Clear and important ditinction The difference between mall, medium and large corporate from ize and budget to culture and capabilitie how up in what commercial bank cutomer expect from Open Banking and how they plan to ue it to expand their ecoytem and extend their reach. Large Corporation Small- and Mediumized Enterprie The two mot ignificant benefit to our organization of uing an Open Banking ecoytem platform: Gain acce to convenient and innovative banking ervice (30%) Allow u to reach more client and partner (19%) Gain acce to convenient and innovative banking ervice (23%) Allow u to reach more client and partner (25%) We d be more intereted in joining an Open Banking ecoytem platform with bank. 72% 65% We would prefer our bank to provide an Open Banking ecoytem. 69% 60% The top three area of our buine that could be improved in partnerhip with our bank, a bank move toward Open Banking: Finance (24%) Payment (22%) Treaury Management (18%) Payment (25%) Cah Management (21%) Finance (18%) We are atified with our organization buine oftware with regard to payment and banking. 51% 39% Note: N=660 (Large Corporation= 330, SME=330) Source: Accenture Open Banking for Buinee Survey

11 GAPS EXIST BETWEEN WHAT CORPORATES WANT AND WHAT BANKS EXPECT TO PROVIDE Commercial bank cutomer want the ame thing that retail bank cutomer want: more innovative procee and better cutomer experience with eamle, eayto-ue olution that help them extend their ecoytem and reach. SME, for example, typically do not have their own Treaury department a their larger counterpart do. Thu, it i valuable for them to have real-time acce to their cahflow and liquidity poition a capability that Open Banking can provide. The right Open Banking olution can give SME an aggregated view of their account acro multiple bank which tranlate into a real benefit in term of better buine undertanding and cah-flow management. A uch, SME want acce to olution that unify and implify cumberome buine and adminitrative procee, uch a accounting, bookkeeping, payment, taxation and cah management. Thoe we urveyed cited payment (25 percent) and cah management (21 percent) a the area of their buine that could be mot improved in partnerhip with their bank. And many are willing to pay a reaonable premium to get the benefit. Bank have a different expectation for SME. The top-two value-added, Open Banking and ecoytem platform ervice they expect to provide for their SME cutomer are banking a a platform that cover all relevant need of the SME value chain (33 percent) and finance (15 percent). Only 10 percent cited cah management and nine percent tated payment. For larger corporate, robut cah management ervice i a given. Some area within their Corporate Treaury department pecifically focu on undertanding the organization immediate cah flow and liquidity poition. It no urprie, then, that large corporate will pay a premium for value-added ervice that deliver more efficient finance procee. Of the top three area of their buinee that could be improved in partnerhip with their bank, large corporation cited finance (24 percent), payment (22 percent) and treaury management (18 percent). From bank view, banking a a platform (22 percent) and payment (15 percent) top the lit for large corporation. Finance (14 percent) came in third for bank, followed by treaury management (12 percent). Though the Open Banking priority gap i more notable in the SME egment, bank will need to offer olution that tightly align with what their commercial client want and need if they are to retain their dominance in thi egment. 11

12 WHERE COMMERCIAL BANKING MUST GO IN THE OPEN BANKING ECONOMY To tay relevant to commercial cutomer and grow, bank mut come out of their comfort zone and rethink the way they addre both SME and large corporate. Bank team that erve thee buine egment repreent two ide of the ame coin: helping buinee improve the way they operate and erve their own cutomer. Thee bank department can learn from one another on how bet to trengthen and expand their role with thee client. We identified four way that commercial bank can ue Open Banking innovation to expand their own ecoytem and reach: Create a 360-degree view of the client Monetize API Etablih revenue-haring ecoytem Do banking a a platform or a a ervice 1 Ue rich data to create a 360-degree view of the client Bank will need to hift from a traditionally narrow, product-iloed way of perceiving commercial cutomer to cloe the gap between what commercial bank cutomer want and what bank expect to provide. With digitization and Open Banking, financial ervice provider have a chance to offer more bundled ervice to meet the unfulfilled need of SME and corporate if they know their client well enough to offer the peronalized, value-added ervice enabled by Open Banking. A key driver for creating an effective and efficient 360-degree view of the cutomer i richer data. Open Banking mean that bank will have acce to data they could not have obtained before, and with that come much greater inight into their cutomer that yield value. Credit coring, for example, can become more precie. Pricing of loan and product can be tightened and refined. Pre-approved loan amount can be offered accurately all becaue the bank better undertand it commercial cutomer behavior and cah flow. 2 Monetize API in three key way In mot cae, the firt wave of regulatoryrequired API coming from bank are either free of charge or work a an additional ervice to retain corporate client. Bank will need to partner with ERP provider and elect fintech to monetize API through joint offering development acro three area (Figure 7): 12

13 A a channel. CitiConnect i a good example. It ditribute an underlying ervice or product in thi ituation, a treaury olution that diplace the previou hot2hot channel. 7 A a product provided to an ecoytem of third-party platform for a far wider reach. One example i Bunq, a Dutch mobile-baed bank that offer a volumetric-driven pricing tructure for API call, uch a initiating euro payment through the Single Euro Payment Area ytem. 8 A data, where an API deliver data point that provide value-added inight to thirdparty platform. Orange Bank, for example, offer value-added data ervice in thi way. 9 3 Etablih revenue-haring ecoytem Though revenue-haring model are new to bank, incumbent will need to embrace them along with ecoytem platform. Bank can work cloely with TPP to create revenue-haring ecoytem that generate a network effect and cro-elling opportunitie. Such an ecoytem offer an expandable, flexible network that i future-proofed and eaily refrehed with new functionalitie. The good new i that 89 percent of bank are ready to build an ecoytem platform with third-party ervice to benefit their SME and corporate cutomer. In doing o, however, bank mut build capabilitie into their revenue-haring ecoytem model, and plan wiely to nurture and hold two of their eential advantage: owning the client relationhip and keeping their client trut. A Open Banking take off, thee will prove vital. 4 Do banking a a platform or a a ervice SME will benefit more from banking a a platform (BaaP), on which value-added ervice can be bundled together with TPP that will generate a network effect and bring cro-elling opportunitie. For larger corporate, the goal i developing banking a a ervice (BaaS), tarting with bepoke API that amplify the power of ditribution and the ability to connect to multiple bank, while booting efficiencie in treaury function. BaaP for SME. To exploit Open Banking for mall buinee, bank can become platform with an API-enabled network of partner complete with adviory, buine management and traditional banking ervice. The key here i integration that allow ervice provider to ue data to anticipate a SME client need and make the right offer to meet thoe need. It what non-bank and new entrant (again, think Xero) are doing and, in the proce, expanding their reach into broader area of the mall buine value chain (Figure 8). BaaS for large corporate. API are a key part of the banking a a ervice olution for larger corporate. While large companie already ue exiting interface for financial data tranmiion and tranaction execution (uch a EBICS in Central Europe and SWIFT internationally), modern and bepoke API and Open Banking amplify the power of ditribution and the ability to connect to multiple bank, while booting efficiencie. Well Fargo and Citi are good example of thi. Still, imply offering API won t meet corporate need for greater efficiency in finance, payment and collection, reconciliation or liquidity management. For thee cae, bank hould partner with ERP provider and elect fintech to develop joint offering. The aim i to provide olution, baed on where the bank i now, that meet large commercial client need. 7 Citi. 8 Bunq, 9 Orange, Offrir-de-ervice-createur-de-valeur 13

14 Figure 7. Bank can monetize API in three key way API AS CHANNEL THIRD-PARTY DEVELOPERS API AS PRODUCT / SERVICE API AS DATA DATA PRODUCT / SERVICE CUSTOMERS Source: Accenture Figure 8. Non-bank cover more of the SME value chain through platform play PAYMENTS IN SMALL- AND MEDIUM-SIZED BUSINESSES PAYMENTS OUT MONEY IN MONEY MANAGEMENT MONEY OUT Commerce Enablement Receive Payment Lending Treaury Management Conumer Financing Send Payment Buine Adminitration Invoicing with Integrated Payment B2B Payment Acceptance Working Capital Finance Depoit & Saving Account Finance Bank Payment Initiation Procurement & Payable Mgmt. Commerce Front End C2B Payment Acceptance Leaing EX Service Ecommerce Finance Card Iuing Expene Mgmt. Real Etate Loan Cah Management Global Payout Financial Planning Other Loan Ecrow and Guarantee Payroll & Penion Financial Planning Tax Area of focu by non-bank for SME offering Platform play within SME value chain Invetment & Other Source: Accenture 14

15 WHAT COMMERCIAL BANKS MUST DO NOW: PROTECT, INVEST AND DIVERSIFY Figure 9. Winning bank will devie a plan over the next 24 month to move forward with their Open Banking initiative for SME and large corporate NOW Protect & retain < 12 MONTHS Invet & grow MONTHS Diverify There are a few action bank can take over the next 24 month to afeguard their commercial market poition and extend their ecoytem and reach. Three tactical area are key (Figure 9): Protect and retain by identifying and developing olution around thoe area where the threat i low or where the bank i dominant (for example, B2B payment acceptance, loan, invetment product, depoit and aving account and ecrow facilitie). Thi tactic alo dictate that bank ready their architecture and organization for Open Banking by building API, decoupling architecture and adapting internal function (uch a procurement, legal, and o forth). Invet and grow by exploring trategic partnerhip. A big part of thi i making better ue of bank data to more effectively team with TPP in way that enure bank are the ecoytem partner of choice by providing, for example, plug-and-play API ervice; etting up banking olution that integrate with their client ytem; creating tool that manage overall engagement; and providing meaningful data inight to increae client loyalty. Thi i about bank boltering themelve commercially for Open Banking monetizing API (a dicued earlier), launching and running developer portal, creating pertinent platform, etting up or improving their partner management capabilitie, and more. Only four percent of bank have no immediate plan to invet in Open Banking for SME and Corporate cutomer. Diverify into new trategic market or ervice by tapping into ecoytem to open new revenue tream in related field uch a leaing, financial planning, payroll or penion ervice. Mot bank expect to derive upward of 20 percent revenue growth from Open Banking for SME and corporate client over the next three to five year. For bank, it mean embracing new growth-inducing option like participating in platform with non-bank (uch a trade, logitic or market place) and exploring new revenue tream from allowing third partie on their platform (uch a kick-back fee). It now time for the Open Banking momentum to wing to commercial banking. Bank that adapt their operating and buine model to embrace platform ecoytem will poition themelve a vital anchor point for optimizing Open Banking for SME and large corporate. Bank have the advantage to lead thi charge, which i what their commercial cutomer want. And bank can gain early mover advantage by taking trategic tep, like integrating API ecoytem that are focued on data integration and ervice and providing the olution that corporate want, when they want it. If they don t, other will. Accenture ha the inight, experience and capabilitie to help bank come out of their comfort zone and ue Open Banking innovation to rehape commercial banking in way that expand ecoytem, extend reach and unlock value for their commercial cutomer and themelve. 15

16 AUTHORS AND CONTACTS Alan McIntyre Senior Managing Director, Accenture Global Banking Hakan Eroglu Senior Manager, Global Open Banking SME Lead, Accenture Conulting Andrew McFarlane Senior Manager, Global Open Banking Lead, Accenture Conulting Graham Rothwell Managing Director, Accenture Payment APAC Maurit Olijve Managing Director, Accenture Strategy Banking Luca Gagliardi Senior Principal, Accenture Reearch Thi document make decriptive reference to trademark that may be owned by other. The ue of uch trademark herein i not an aertion of ownerhip of uch trademark by Accenture and i not intended to repreent or imply the exitence of an aociation between Accenture and the lawful owner of uch trademark. RESEARCH METHODOLOGY Accenture Reearch conducted an online urvey of 100 global bank, 330 mall buinee and 330 large corporation in 11 countrie (U.S., Canada, U.K., France, Germany, Italy, Sweden, Autralia, Singapore, Thailand, and Hong Kong), between September 1, 2018 and September 24, Bank executive leader we interviewed included chief operating officer, chief information officer, chief innovation officer, chief information ecurity officer, head of tranaction banking, director of payment ervice, director of brand marketing, head of payment infratructure, head of Open Banking and head of payment product. For large corporation and mall buinee, the panel included chief operating officer, chief financial officer, head of treaury, head of cah management, head of procurement and treaurer. The overall margin of error i +/ percentage point at the midpoint of the 95 percent confidence level. ABOUT ACCENTURE Accenture i a leading global profeional ervice company, providing a broad range of ervice and olution in trategy, conulting, digital, technology and operation. Combining unmatched experience and pecialized kill acro more than 40 indutrie and all buine function underpinned by the world larget delivery network Accenture work at the interection of buine and technology to help client improve their performance and create utainable value for their takeholder. With 459,000 people erving client in more than 120 countrie, Accenture drive innovation to improve the way the world work and live. Viit u at ABOUT ACCENTURE RESEARCH Accenture Reearch hape trend and create datadriven inight about the mot preing iue global organization face. Combining the power of innovative reearch technique with a deep undertanding of our client indutrie, our team of 250 reearcher and analyt pan 23 countrie and publihe hundred of report, article and point of view every year. Our thought-provoking reearch upported by proprietary data and partnerhip with leading organization uch a MIT and Singularity guide our innovation and allow u to tranform theorie and freh idea into real-world olution for our client. Viit u at Copyright 2018 Accenture All right reerved. Accenture, it logo, and High Performance Delivered are trademark of Accenture