Louise Beaumont

Dear bank shareholder

Are you investing in a high-cost utility?

We're experiencing a new era in banking. The competitive environment in which your bank is operating is undergoing a massive transformation. Attention shareholders, your dividend is at serious risk.

Customers' expectations are shifting. And competition to offer them better, faster, more personalised experiences is emerging everywhere – led by innovative fintechs in financial services.

The nature of competition in banking is also changing and with it, the way banks will create value in future. This is because they're entering the era of Open Banking.

Open banking

Regulators in the UK and Europe now require banks to create digital portals (Application Programme Interfaces, APIs) that enable data to flow freely in real time between separate organisations.

For a business used to hoarding confidential customer information, this is a rude awakening.

Data pooling

APIs are tools to enable collaboration between different data owners – once my data can combine with your data, we have a richer set of information to analyse for new insights that can lead to new services and experiences.

This is the world in which companies such as Amazon, Google and Facebook have always operated – one in which they draw together ever larger pools of data as the raw material for new and better services.

The risk for a bank that doesn't engage fully in this new way of working is that it will end up as a provider of back-end infrastructure – a dumb pipe – on which others will build the high-value services that become essential, daily fixtures in customers' lives.

5 signs your bank is in danger of becoming a dumb pipe

It's time to worry if your bank:

  • sees Open Banking as an inconvenience or a threat
  • is losing visibility of its customers
  • develops 'me too' digital products
  • isn't prioritising customer insights or tech talent
  • doesn't have any data partnerships


Facebook wants to be the platform of choice for banking customers

No one who opens a Monzo account has left their bank – they're just using the bank as a plumbing provider


of adults would opt in to financial services which use their data (68% of Millennials)

Source: Mintel, March 2017

Customers' expectations are shifting and competition to offer them better, faster, more personalised experiences is emerging everywhere – led by innovative fintechs in financial services
Louise Beaumont

Co-chair, techUK Open Bank Working Group

Listen in depth
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How will the competitive environment your bank operates in change once Open Banking regulations are in place in January 2018?

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(30 sec)

Can you describe the new requirements banks are facing?

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What are the main risks banks face if they don't fully embrace these changes?

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(1 min)

What are the main signs that your bank is in danger of becoming a high-cost utility – a dumb pipe?

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(1 min)

What are your recommendations for how big financial companies should react to the changes that will be ushered in during this Open Banking era?

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