INNOVATION INSIDER: Open Banking It's all about customer centricity. A view from Martin SLADECEK and Margus SIMSON 🌍🤝🏼

As in other sectors, the behavior of banking clients is changing significantly, and even more so due to the health crisis. They increasingly expect their bank to provide non-banking services, immediate solutions, banking on demand and local banking through a combination of digital interfaces and highly attuned client relations. Competition is growing fiercer with new players (neobanks, GAFAM, BATX, etc.) who are expanding their offering through platform-based partnerships and accelerating their development. This method enables them to offer high-caliber experiences to clients. Their banking offering remains limited but is developing quickly.

How do open banking and the use of platforms create value for our clients and employees? What are the use cases within the Group and what is the concrete contribution of this new business model? Focus on…

Komerční banka (KB), the universal bank of the Group in Czech Republic, aims to be more than just a banking service provider, but also a partner, consultant, and facilitator. KB adopted an open banking platform model, opens its services to partners and the FinTech ecosystems by offering to interact through KB's digital channels. By aggregating banking and non-banking services into larger and more meaningful customer journeys, KB puts clients and users at the center of the relationship. Nowadays, KB transforms itself in more parallel dimensions into the agile digital bank, with special focus on sustainability.

Martin Sladecek was responsible for the Open banking creation in KB, managing the KB to become recognized Open banking leader on the national and international level. Now, he is the member of the French SG team defining Open Banking strategy for the SG’s French retail bank of the future.

Margus Simson was digitalizing biggest Estonian banks successfully and the Estonia state as well. Now, he is the KB’s Chief Digital Officer directly managing KB’s digital transformation and shaping the rebirth of the traditional and universal Czech bank into the new digital disruptor, the digital bank of the future.

1)  Martin, Margus, how you can manage the client to profit from the open banking and its various strategies?

It`s all about customer centricity. KB's approach to digital channels aims to make the user experience the best of breed on the market. This customer-centric approach, instead of product-centric, focuses on the customer's needs rather than the bank's needs. The client feels the added value and can be satisfied daily even in unexpected situations, the client relationship is maximized via increased digital interactions and the client can meet the bank even in the extended bank's distribution network within the 3rd parties' environments.

 And KB's approach to Open Banking is same because solution for the perfect client satisfaction is simple. Don’t start with the product, service, or some specific Open Banking approach, such as are Bank as a Service or Bank as a Platform, BUT start with your client! And when you understand your client’s needs then start to design the product or service.

Margus: As the customers get more wealthy, their main requirement towards the banks is not just payments and basic transactions anymore. They need financial management and advice much more. Open banking is directly contributing to serving this need of the customers. It is natural that because of different use cases customers will use different banks and their services, there is no point to fight against that. It matters much more which bank is able to consolidate the best overview about the customer, have the best insight about their needs and is able to gain the trust of the customer by giving the best advice. Therefore open banking is satisfying directly the changing customer need.

2)     Our Group's digital and innovation strategy focuses on expanding AI, open banking and open innovation. How is open banking strategic?

Margus: Banking is not a core need of a person – banking is rather providing means for some other customer journeys to be executed seamlessly and conveniently. You need mortgage in the home buying process, you need payments in consuming products or services, etc. It means that banking as such happens rarely alone, it has to be open enough to consume the data from other services to operate and provide its own processes and data to other services. Credit is an excellent example here – to make a credit decision, you need information from many sources and at the same time the decision to give a loan to the customer is part of some other process. Openness is the core feature in this modern world, where services of different industries are only getting more and more integrated – the best services by merging number of services into one seamless setup.

In this sense both openness and open banking are strategic directions – if bank wants to play an integral role in local society, its power is bigger when it has more connections to other participants on the market. Sometimes it seems counterintuitive, but giving away control and opening yourself is making banks only more capable of doing more business.

Martin: Open banking should create value, at first for the customer, for the bank, but it’s perfect when there can profit on it both. We live today in the world where usual banking products and especially the transactional ones have become the commodities. Clients are looking for strong stories or emotions along services and open banking is perfect option to be unique, it creates the added value where your competitors don’t have it and finally it is the way how to innovate rapidly. It is one of catalysts of open innovations. I often say: Clients are looking for strong emotion and story, not for the usual commodity. And perfect service doesn’t mean to provide just another best digital bank but to provide you the love brand you stick with, because of shared passion.

3)  Can you give us some concrete examples or ways this is demonstrated?

Martin: Bank identity in the Czech republic is one of these. It started as the inner capability of the bank allowing clients to come securely into digital banking channels and applications. Later, we started to provide this service to our group entities, then, we opened it to the third parties and then, we agreed with the Czech government and other Czech banks to join one common platform, the national Czech bank identity hub. It digitalizes many various services provided by the government or commercial vendors and simplifies everyday life of all Czech citizens. Digital client bank identity become the true cornerstone and catalyst of open platforms, connecting client journeys securely across banks and partners with frictionless customer experience. With the health crisis is more than relevant to manage everyone’s needs fully digitally as it was never before.

Another inspiring example could be the service for fast-track business origination. Long lasting process of entrepreneurship legal origination with required physical attendance at many offices of governmental and commercial parties was exchanged for simple and straightforward service provided by the KB and specialized partner. In order to rocket start your new business, it is needed now just to fill-in simple web form, let us manage what is necessary in all needed registrations during the company legal setup and you can just focus on your desired business. Simpler, shorter, and reliable.

Margus: I bring some examples from my native country – Estonia. The wide use of digital signature there has opened a completely new avenue of possibilities to serve the customer. For example, to buy or sell a car, you do not need to go anywhere or anything – integrated government services, banks, identity providers and companies selling/buying cars means that at some point you simply get an email into your mailbox with contract, you send it back a few minutes later with your digital signature and all the changes in the registries and banks just happen behind your back without needing any additional step from you as a customer. This kind of service would not be possible if banks would not open their systems to create integrated services. Customers love the convenience provided by those integrated services – it means that there is a very direct connection between open banking and customer satisfaction, which also means more business opportunities for the bank.  

 4)  In your opinion, where will we be in five years open banking?

Margus: Digital services, either in banking or elsewhere, are going to be in many ways fundamentally different from the current offering. Zero-click, fully personalized, service design first, straight-through processing, everything deeply soaked with data and intelligence - this will be the minimum that customers will accept as good enough. 2027 will not be so much about the internet or mobile, it will be intelligence and AI-first. Such a shift will present a long list of challenges for companies to overcome, and the most crucial of them are related to ability to open themselves up, integrating customer data heavily into the processes to provide individualized services and simplify the services to the extent that customers participation is taken to the minimum.

Martin: All of us are taking care about the sustainability more and more. People and companies as well. The Open banking is perfect catalyst for banks to provide true sustainable banking through the creation of eco-ecosystems. Interconnected platforms of banks and partners encouraging the clients execute their own everyday climate action by tailored and highly relevant advices, specialized products and services.

From the point of view of client interaction, it will be highly autonomous, and the digital bank of the future will look like your today’s smartphone. Initially equipped with mix of products perfectly matching client profile and later self-assembled by the client through the bank’s AppStore to become the client’s “usual starting point” of ANY authenticated digital interaction within the whole ecosystem of the bank and its partners.

From the point of view of the organization it requires real and genuine out-of-the-box thinking in many ways, disciplines and departments. In Open Banking you are achieving higher added value, better experience and higher satisfaction by interconnecting inner assets and capabilities with the outer world. So, in the end, the highest challenge is only your own mindset.

5)  3 key words to describe yourself?

Martin: Innovations and sustainability evangelist

Margus: Digitalization, simplification, service design.