Kevin Guest is a Consultancy Director with about 15 years of experience in financial services. This article by Kevin will elaborate on how you can ensure that what you try to do within open banking and embedded finance delivers the commercial impact you desire.
My focus is all on how we can deliver something with speed and how you can deliver something which is a good return on your investment. Typically, what tends to happen is there are many committees; you have to get buy-in, you have to sit in front of shareholders, maybe you have to wait until the end of the financial year, and then you have to compete against other departments who also want to be funded.
Organizations have a transformation process, a project management process, a procurement process, etc., that you need to follow. There’s one common theme in all of this, which is the identification of a need, defining that need, and then trying to create some value. But we’ve all come up against scenarios where the CTO says he has the team and capability to build it in-house. But open banking and embedded finance are slightly different as it is regulated, and you have to be compliant.
So, the questions that you may face are –
- Do we have the open-banking technical expertise in-house?
- Should I build it, buy it or outsource it?
- Do I have the expertise to manage ongoing compliance requirements?
- Should I work with third-party providers who are experienced in this sector?
The cost-effective approach
You have to focus on finding the most cost-effective approach to delivering solutions. You would have heard of API teams, product teams, the process you’re going through, and the approach you’re going to adopt. The simpler the process, the easier it is to deliver. The process has to align with your business strategy.
- Define the need – You must consider your goals, objectives, vision, and mission. Consider what sets you apart from your competitors. Consider what your focus should be and why. This comes from consumer research. Consider your staffing needs internally. Consider how they can meet their objectives and then consider whether or not you have the right capabilities, internally and externally, to deliver on a project. Create a problem statement or an opportunity statement.
- Determine value – Understand what the value is. Determine the value. So what does the value mean to us? Where is their value? Value could be the driving of new revenue, a new revenue stream. It could be about customer retention, satisfying a customer need, or solving a customer problem. You could need to put something in place to survive as a business. Once you have the values listed, you can prioritize and choose one or two best ones that would give you the problem statement to work on.
- Build without barriers
- Test small – Test in a small, controlled environment.
- Launch – The launch depends on your problem statement and how singular you made it. There is a difference between proof of value and proof of concept. In a proof of concept, you’re already considering investment, cost, and spending money on your project teams and pushing it into a live production environment. When you think that way, you’re automatically thinking about scale and making money on the investment I’ve put into this. In proof of value, you test, fail, test, test again, and iterate. And when you’ve got something you think has value, you move to the proof-of-concept stage.
You need to consider internal and macro challenges.
- Investment committee process
- Procurement process
- Tendering and onboarding
- Timeframe for all these activities
- Changing regulations
- Social changes
- Technological changes
So, there’s a future ecosystem that’s out there. You have to think about your commercial journey. Think about commercializing services and products, and then consider these macro environments.
- Open banking and embedded finance
- New payment architecture has been designed and will be out in three to five years. That will change how payments happen.
- Digital Identification
- Credit profiling
- Connected society – the expectation that open data will lead to connected marketplaces.
- Global Awareness
Considering these ecosystems, it’s in all of our interests to think about how we connect and commercially invest, but do it in a way that doesn’t impact the customer.