THE MONETIZATION OF OPEN BANKING: How legacy institutions can use open banking to develop new revenue streams, reach more customers, and avoid losing out to neobanks and fintechs

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Business Insider Intelligence

Open banking has arrived, and it’s transforming the UK’s banking landscape — next up could be the world. Regulatory efforts in the UK are transforming retail banking, reshaping incumbents’ relationships with customers, and easing entry for fintechs.

Regulators across every continent are responding with actions of their own. Underpinning open banking initiatives is the idea that ownership of transactional data belongs to consumers instead of incumbent financial institutions.

The implications of this change for established lenders in the UK are significant. For those that act, open banking presents substantial revenue-generating opportunities.

But the consequences of inaction are even more severe: Business Insider Intelligence estimates that by 2024, £6.5 billion ($8.4 billion) of UK incumbents’ revenues will be under threat of being scooped up by forward-thinking companies like fintechs and neobanks. Yet even through the financial incentives to act are clear, many incumbents are struggling to determine the best path to monetization. In fact, some aren’t even sure what their options are.

In The Monetization of Open Banking report, Business Insider Intelligence identifies monetization strategies incumbents have at their disposal, describes how they can determine the best approach for their specific needs, and outlines actionable steps they need to make their chosen open banking initiative successful.  

The companies mentioned in this report are: Allied Irish Bank (AIB), Bank of Ireland, Barclays, Danske Bank, HSBC, Lloyds Banking Group, Nationwide, RBS Group, and Santander, Monzo, Starling, ING, Yolt, Fidor, BBVA

Here are some of the key takeaways from the report:

• Driven by regulatory action, open banking is transforming the UK’s banking landscape, but it’s also gaining momentum globally.
• For incumbents, open banking entails a significant threat to their entrenched position.
• But for forward-looking banks, there are substantial opportunities for revenue generation, both directly and indirectly.
• To seize these opportunities — and avoid losing revenue to fintechs and neobanks — it’s critical that legacy players focus their efforts in the right direction, including identifying their strategic priorities.

 In full, the report:

• Details the UK’s Open Banking regulation in depth.
• Forecasts the size of the UK’s Open Banking-enabled banking industry over the next five years.
• Discusses the types of monetization opportunities available for incumbents, as well as non-direct revenue-generation opportunities.  
• Provides actionable steps on how banks can best determine the best strategic approach from the options available.

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