Open banking is more than just a regulatory requirement for regional banks. It's important that regional banks recognize this isn't a compliance exercise. It's going to reshape the competitive environment.
Open banking is gonna set a new standard for how customers have access to direct their data. It's also going to allow, banks the opportunity to get to know customers better if they look at ways to ingest new sources of data and also think about new product sets that they can offer.
So any more digital experiences are an expectation of customers, and customers in this open banking environment are really going to be looking to the institutions that can help provide them a new set of experiences, and offer them a way to better manage their financial lives. It's important that regional banks recognize providing data out isn't the end game. They also need to think about how they receive data in so that they can maximize their understanding of their customers and the potential to provide their customers new experiences and new products. This will involve thinking from a human-centric point of view about how they wrap a new experience around their customers as open data is available to them to think about, you know, their customers' journeys, their life styles, and ways that they could create new means of personalization.
One of the benefits that regional banks have that separate them is the affinity customers have for the localized services and experiences they provide. This is now coupled with the need to be able to provide those same customers digital experiences wherein they can interact with the bank in different means and and methods.
So open banking will present new opportunities to redefine those experiences and journeys while maximizing the potential of the customer affinity that regional banks already have.
An important aspect of thinking about open banking, but also thinking about how a bank maximizes its capabilities, is beginning to look outside the traditional walls of the bank and look towards fintech partners and other types of partnerships that can amplify the collective value that a regional bank can provide back to its customers. This can allow them to enrich data sets and also think about unique new experiences that they could be providing by leveraging the capabilities of third parties. Capabilities of third parties.
It's important to recognize that open banking is not solely a consumer based benefit. Many of the institutions that I speak with have talked about how their commercial customers are interested in having more value added services to help them optimize their cash flows, think about how they manage their own data, and also think about how they can manage inventories and other capabilities implicit within their business. This is becoming a fundamental capability that banks can offer, in addition to their traditional banking products.
A big part of being able to move data for your customers is about ensuring that your customers trust their ability to have secure transactions with your data. It's important that there's clear protocols and means of protecting against cyber risks and fraud when it comes to porting customer data between institutions.
So one of the biggest challenges that our bank clients face is the ability to have all data in a way that's manageable, highly portable, and transferrable.
An aspect that comes with that is also having clear data governance, and the way that data is managed and being able to move data assets readily.
So as we've talked to multiple clients about open banking, there's a clear recognition that not everybody is in the same place as to what they want to do as an institution.
Some are looking at this as a compliance exercise and evaluating what it means to comply recognizing that many of the challenges they'll have to face and overcoming just compliance are big challenges in and of themselves.
Others are thinking about how do they really maximize this growth opportunity, and how do they think differently about how they're gonna create customer affinity and growth. As a result, we've been helping banks in both situations as they think about the right paths that they need to navigate.
At LEK, we're leaning into areas of growth and disruption with our clients, helping them understand how to navigate these new challenges, such as the ones presented by open banking. Open banking is an area that we as a firm have spent time in overseas in markets that are much more mature and have already navigated some of the challenges that exist.
In doing so, we understand that not every customer is in the customer is in the same place. So as a result, we're leaning on our broader capabilities around understanding, you know, customer journeys, voice of the customer, areas of product growth within banking, as well as thinking about how do we partner with other third parties who can be helpful to our clients so that we can bring a complete solution.
