Open banking is on everyone’s lips these days. But there seems to be more talk than actual practical solutions available right now for clients. The fact is, many banks are delaying and even preventing open banking, Thomas Mueller writes in his article for finews.first.
This article is published on finews.first, a forum for authors specialized in economic and financial topics.
«Between hype and reality» was the title of an article published by the Swiss Bankers Association in its current series on the issue. Other authors of articles in the series published on the SBA’s blog address the topic but then focus primarily on the normal questions of technology. But questions of technology are not the key point when it comes to bringing Switzerland further forward in open banking.
What is lacking is openness on the part of the majority of banks and a willingness to break away from old patterns of behavior that seek protection from competition through isolation. The desire for change appears to be generally absent.
«Open banking involves more than just technology»
In terms of technology, there is indeed a great deal of hype and considerable dynamism. New approaches with modular «digital hubs» are being developed, and standardization is being driven forward. But open banking involves more than just technology. It’s about the basic issue of the additional value for clients from open banking, and whether they are willing to pay for it. There is undoubtedly a need for current business cases and a greater awareness of the associated value proposition.
To take a practical example, Bank CIC and its partners Ti&M and Crealogix recently launched a multi banking offering. Essentially this means integrating all accounts held with external banks into their own e-banking, improving the overview and making it easier to plan liquidity. In addition to a consolidated asset overview, there is also the ability to centrally process payment transactions made through all banks.
«The reality is even more gloomy»
But no bank is able to make open banking, or multi banking as a part of this, happen on its own. Other providers have to cooperate and be equally open to engaging in competition. Fintech companies and product and information suppliers in other industries have long been used to this and do not shy away from the transparency required. In the banking sector by contrast, despite all the rhetoric about digitalization, time seems to have stood still in this regard.
A present fewer than 15 percent of all banks in Switzerland offer their clients the EBICS interface (EBICS = Electronic Banking Internet Communication Standard) and the multi banking solutions this enables. If you look a little more closely, the reality is even more gloomy: some of these (just) 30 banks only offer their clients EBICS on a very selective basis.
«Most banks are afraid of putting their client relationships at risk by sharing information»
Others do not allow it as an option for retail clients at all, claiming the offering is only intended for corporates, or charge hefty additional monthly fees or insist clients process all their payment transactions with them and generate a minimum level of turnover. Some banks also try to dissuade clients by using non-transparent criteria against deploying these innovative solutions. This is not what it means to be client-friendly.
The question remains as to why so many banks continue to resist open banking. Most are probably afraid of putting their client relationships at risk by sharing information. But defensive behavior like this is no way to keep clients loyal. Quite the opposite, in fact: clients have an incentive to switch to a new banking partner able to offer innovation and simplicity, generating costs savings and efficiency.
Open banking is the right path to and for the future. Clients are looking for meaningful services, as few technical obstacles as possible and the greatest possible overview of a comprehensive offering. That includes multi banking, allowing further expansion of the digital service channel.
Thomas K. Mueller has been the CEO of Bank CIC since 2010. Prior to that, the graduate of the University of St. Gallen was head of premium banking at Migros Bank, where he was also responsible for private banking, capital markets and asset management as a member of the executive board. He also held other management positions, including head of the market area German-speaking Switzerland at Banque Cantonale Vaudoise and regional head of corporate banking at Credit Suisse.
Previous contributions: Rudi Bogni, Peter Kurer, Rolf Banz, Dieter Ruloff, Werner Vogt, Walter Wittmann, Alfred Mettler, Robert Holzach, Craig Murray, David Zollinger, Arthur Bolliger, Beat Kappeler, Chris Rowe, Stefan Gerlach, Marc Lussy, Nuno Fernandes, Richard Egger, Maurice Pedergnana, Marco Bargel, Steve Hanke, Urs Schoettli, Ursula Finsterwald, Stefan Kreuzkamp, Oliver Bussmann, Michael Benz, Albert Steck, Martin Dahinden, Thomas Fedier, Alfred Mettler, Brigitte Strebel, Mirjam Staub-Bisang, Nicolas Roth, Thorsten Polleit, Kim Iskyan, Stephen Dover, Denise Kenyon-Rouvinez, Christian Dreyer, Kinan Khadam-Al-Jame, Robert Hemmi, Anton Affentranger, Yves Mirabaud, Katharina Bart, Frédéric Papp, Hans-Martin Kraus, Gerard Guerdat, Mario Bassi, Stephen Thariyan, Dan Steinbock, Rino Borini, Bert Flossbach, Michael Hasenstab, Guido Schilling, Werner E. Rutsch, Dorte Bech Vizard, Adriano B. Lucatelli, Katharina Bart, Maya Bhandari, Jean Tirole, Hans Jakob Roth, Marco Martinelli, Thomas Sutter, Tom King, Werner Peyer, Thomas Kupfer, Peter Kurer, Arturo Bris, Frederic Papp, James Syme, Dennis Larsen, Bernd Kramer, Ralph Ebert, Armin Jans, Nicolas Roth, Hans Ulrich Jost, Patrick Hunger, Fabrizio Quirighetti, Claire Shaw, Peter Fanconi, Alex Wolf, Dan Steinbock, Patrick Scheurle, Sandro Occhilupo, Will Ballard, Nicholas Yeo, Claude-Alain Margelisch, Jean-François Hirschel, Jens Pongratz, Samuel Gerber, Philipp Weckherlin, Anne Richards, Antoni Trenchev, Benoit Barbereau, Pascal R. Bersier, Shaul Lifshitz, Klaus Breiner, Ana Botín, Martin Gilbert, Jesper Koll, Ingo Rauser, Carlo Capaul, Claude Baumann, Markus Winkler, Konrad Hummler, Thomas Steinemann, Christina Boeck, Guillaume Compeyron, Miro Zivkovic, Alexander F. Wagner, Eric Heymann, Christoph Sax, Felix Brem, Jochen Moebert, Jacques-Aurélien Marcireau, Ursula Finsterwald, Claudia Kraaz, Michel Longhini, Stefan Blum, Zsolt Kohalmi, Karin M. Klossek, Nicolas Ramelet, Søren Bjønness, Lamara von Albertini, Andreas Britt, Gilles Prince, Darren Willams, Salman Ahmed, Stephane Monier, and Peter van der Welle, Beat Wittmann, Ken Orchard, Christian Gast, Didier Saint-Georges, Jeffrey Bohn, Juergen Braunstein, Jeff Voegeli, Fiona Frick, Stefan Schneider, Matthias Hunn, Andreas Vetsch, Fabiana Fedeli, Marionna Wegenstein, Kim Fournais, Carole Millet, Ralph Ebert, Swetha Ramachandran, Brigitte Kaps, Thomas Stucki, Teodoro Cocca, Neil Shearing, Claude Baumann, Guy de Blonay, Tom Naratil, Oliver Berger, Robert Sharps, Tobias Mueller, Florian Wicki, Jean Keller, Fabrizio Pagani, Niels Lan Doky, Michael Welti, Karin M. Klossek, Ralph Ebert, Johnny El Hachem, Judith Basad, Katharina Bart, Thorsten Polleit, Beat Wittmann, Bernardo Brunschwiler, Peter Schmid, Karam Hinduja, Stuart Dunbar, Zsolt Kohalmi, Raphaël Surber, Santosh Brivio, Gérard Piasko, Mark Urquhart, Olivier Kessler, Bruno Capone, Peter Hody, Lars Jaeger, Andrew Isbester, Florin Baeriswyl, and Michael Bornhaeusser, and Agnieszka Walorska.
