Open Banking is profoundly changing the landscape of banking and financial services. The gradual transformation of the industry has accelerated thanks to new regulations, fierce competition in the banking sector and the changing needs of end-users.
A revolution in the banking industry is underway
Open Banking was born following the entry into force of the new version of the European Payment Services Directive (PSD2) in January 2018. While some banks remain wary, all are forced to adapt in order to generate alternative sources of revenue and win the loyalty of new customers in an ultra-competitive environment.
The movement also has its roots in changing consumer behavior. Today, over 5 billion people own a cell phone. Users are demanding simpler, faster banking services. In this context, Open Banking can be seen as an opportunity for banks, helping them to target their customers' expectations more precisely. The era of open banking will also encourage partnerships and the creation of services not previously offered by these establishments.
Closer collaboration between banks and fintechs
To stand out from their competitors, several banks have decided to collaborate with Fintechs. These players have everything to gain by joining forces to grow together.
At the 5th edition of the Paris Fintech Forum, the Crédit Agricole Group announced the acquisition of bank account aggregator Linxo, in which it now holds over 85% of the capital. Launched in 2010, the application now offers a wide range of features, such as categorization of expenses by item, interactive graphs and a "forecast" to anticipate a possible overdraft over 30 days. Linxo has nearly 30 corporate customers, including HSBC, Maif, Meilleurtaux and Younited Credit.
This operation is not unprecedented. In 2019, Crédit Mutuel Arkéa acquired another account aggregator, Budget Insight. The group intends to take advantage of Open Banking by developing personalized services.
For its part, BNP Paribas recently invested in Tink, Europe's leading Open Banking platform. In concrete terms, the startup collects data from major financial institutions and makes them accessible via its platform. This data is only made available with the consent of end-users.
Thus, through Open Banking, national regulators are intensifying competition in the market. This movement represents a real opportunity for banks to overhaul their technological infrastructures and meet new user requirements by joining forces with fintechs.