By working with the experts at Celero, your credit union can devise a strategy to leverage open banking and gain an advantage in the market.
Canadian regulators will soon implement the framework for open banking and credit unions will need to be prepared. At Celero, we have experts who have been researching how open banking has been implemented around the globe, keeping tabs on all the updates that are being shared from governing bodies and actively participating in the open banking dialogue here in Canada. Open banking places consumers at the centre of decentralized finance, shifting control to them and transforming how they bank. With the right strategic approach, open banking presents an opportunity for credit unions and their members to capitalize on an expanding financial service ecosystem. With this in mind, our Open Banking Lead, Deborah Moore, has developed a three-step approach to help your credit union prepare for the future.
You can learn more about open banking and the future of financial services in Canada, which serves as foundational knowledge for why and how Canada is moving towards an open banking model. Keep reading to discover how Celero can help prepare your credit union for open banking.
Celero recommends three areas of focus as part of your open banking readiness planning: Impact, Education and Strategy. The program will ensure leaders and credit union Boards understand open banking and the importance of data governance and cybersecurity. With the right education and strategy, credit unions can change the paradigm of how products and services are sold.
One of main issues in the market is that Canadians are not in control of their data as financial institutions typically own customer data. Consumer-directed finance (or open banking) enables secure data sharing with consumers’ consent for greater control, enhanced protection and the ability to offer value-added and competitive products and services, all in one place.
Consumers often complain about lack of transparency in pricing, and currently lack a consolidated view of their finances, requiring them to manage multiple passwords and logins for each financial institution they deal with. Today, they have a limited ability to manage their finances holistically which requires doing most of the heavy lifting themselves. This creates an overly complex and disjointed experience across providers and services.
With open banking, ownership, control and choice shifts to members by expanding their access to a broader range of providers and the types of products and services that are available to them. This in turn increases transparency by enabling service and price comparisons and simplified switching. Although credit unions will likely be subject to increased competition and pricing pressures, they also have an opportunity to leverage open banking to implement the services members want and need and acquire potential members thanks to the ease of switching institutions that comes with open banking.
Open banking empowers consumers and businesses to control which data is shared with who, for how long and how it will be used. Traditional banking is a fully vertically integrated value chain that is asset-heavy, with a large branch network and a built-in-house product-centric culture. The legacy structure is rigid and non-modular, with outdated tech stacks known for their low scalability. It is difficult to integrate third-party players and functionalities when operations are siloed and manual processes and poor data management compound the issue.
New age banking is fully digital and platform based. As part of a large emerging open banking ecosystem, it is essential to be customer-centric, lean and agile. In an open platform, there are advanced digital capabilities with high scalability enabled by microservices and open-platform architecture. Financial institutions can take on data-driven business models with simple, automated processes that give them the ability to plug and play new functionalities.
The open banking regulatory framework is in development and will include new standards and rules that outline privacy, security, liability and accreditation requirements in order to participate in Canada’s open banking ecosystem. This means there will be implications for people, process and technology. Assessing these impacts and beginning to plan for them now will help both prepare for the changes and determine how your organization chooses to leverage open banking.
Innovation is about people, not just technology. Creating a shared understanding for employees, Boards and executives of how banking will change as new regulatory frameworks like open banking roll out is a key step to prepare your organization for the future.
Celero’s open banking readiness program includes a readiness assessment of your organization to recommend the actions you need to take to be prepared. Then we engage your leaders to create a better understanding of open banking, identify the capabilities needed, enable change and help set the right strategy in place to best leverage open banking for your members. Finally, an educational session will ensure that your Board members are equipped with the latest information so they can make the best decisions for members.
Many credit unions are on the path already to modernize and digitally transform their organizations. Developing an open banking strategy allows you to bolster value to members and accelerate your digital transformation. You can do this by taking stock of what services are differentiated and cement loyalty versus what can be delivered more effectively through partners. By considering the roles of products, you can envision beyond finance to open data and non-financial product bundles. It is also important to grow and leverage data competencies by establishing sound data governance management practices.
Credit unions can also leverage the trust advantage they have with members by delivering capabilities now in advance of open banking to mitigate initial threats and shore up security. It is essential to focus on your differentiation from other financial institutions and use size to your advantage to be agile. It is also vital that you educate your members on open banking so they can safely participate in the evolving digital economy. Our experts at Celero can work with your leadership and Board to come up with a strategy to leverage open banking and gain a market advantage.
How can your credit union make power plays to beat out the competition in the wake of open banking? It is important to solve existing member and operational problems to maintain relationships. Looking to other jurisdictions, adoption has focused on solutions that solve key consumer and small business pain points that few financial institutions have tackled on their own such as account aggregation, budgeting and cash management. Here are a few areas for credit unions to consider as part of their strategies:
- Deliver a holistic 3600 view of members finances
- Layer-in cash flow and money management tools
- Become the accounting department for businesses
- Solve access problems for gig workers and newcomers
- Tackle new inclusion and gaps that arise from open banking
By choosing Celero to help you prepare for open banking you not only get access to our three-step approach created by Deborah Moore, but you also get access to our integration platform, and in-house expertise in areas like cybersecurity and compliance.
Have questions about how our experts can help your credit union prepare for open banking? Contact us or your Celero Account Executive and we can discuss further with you.