Our four-step approach to creating an open banking strategy

The Bank of Delaware launched a debit card pilot program in 1966 as an alternative to carrying cash or a checkbook—marking the start of one of the biggest changes in banking history. It’s hard to imagine now that any bank could have resisted this change, but it took time for debit cards to become widely adopted. 

There’s a similar revolution happening today in financial services with open banking. Fintech businesses have hastened the move toward open banking, changing customers’ expectations and demand for more data-powered features. 

Open-banking rates in the United States continue to grow rapidly, with the pandemic only accelerating that trend: 60% of customers are willing to share significant personal data with their bank when this exchange offers additional features and a personal experience. This gives banks a unique opportunity to collect more useful data and leverage that information for increased profits and improved customer loyalty. 

Institutions may feel like current trends are forcing the premature or unnecessary adoption of open banking. But the reality is businesses that resist this new approach will miss out on major opportunities for growth.

Adopt open banking with an agile framework 

Change is not easy, especially in large financial institutions. We understand the challenges that come with innovating your banking infrastructure. That’s why we recommend institutions take a strategic approach to open banking by following a four-phase methodology:

1. Assess  

During the assessment phase, we analyze your bank's preexisting foundational architecture and established skill sets to determine its ability to develop and support the open banking framework and processes. This includes deciding on the right level of governance, prioritizing the use cases we’ll focus on first, and establishing change management communication internally and with third parties. Additionally, we’ll perform a gap analysis to reveal the next steps in implementing your open banking framework. 

For example, we worked with a client who was considering an open banking framework. We performed a technology roadmap assessment to help them understand which off-the-shelf cloud technologies could be integrated to keep their data organized in-house. The assessment revealed that they were not yet ready for open banking. First, we needed to lay the technological groundwork to get their organization ready.

2. Design 

During the second phase, we start gathering and documenting the technical and system requirements needed to build your open banking framework. The design will be heavily influenced by your project goals: For example, you may want to provide more data visualization options for your customers. Additionally, we’ll determine what kinds of coding, integration, and data requirements need to be in place. 

We’ll also work on journey mapping. This is crucial because open banking requires that we consider all the possible data connections. We’ll map out how you’ll deliver services to your customers, source data services from third-party fintechs, and how other partners can connect with your systems.

3. Build and deploy

Using the requirements gathered in the design phase, the development team has the capability and direction to start building your solution. There are four different aspects of the project that work holistically to ensure project success during this phase: 

• The functional workstream analyzes the systems that are being connected and the people who are using them. The team will think through the business, customer, and third-party fintech user experiences.  
• The technical workstream covers the team’s efforts to integrate technical systems. In a bank, these include the core system where all your transactions are recorded — your source of truth for deposits and loans — and middleware.  
• The data workstream ensures that data is correct, is able to transfer smoothly between applications, and can be transferred securely. If you can’t do things securely in open banking, then the whole system is undermined.  
• The change management workstream involves communicating to different parties how this cohesive system works, what the framework looks like, and how each party should interact with it. 

During the build and deploy phase, our team will use an iterative, sprint-based approach. This approach will help you realize value faster and give you opportunities for feedback and adjustments.

4. Monitor 

As part of the initial implementation monitoring, we’ll define key performance indicators (KPIs) and set metrics regarding the return on investment that you should achieve from your open banking initiative. We’ll establish baselines for Day 1 so that you can track and measure metrics like volume growth, adoption, speed of delivery, and new channels in the future.  

Additionally, we’ll set up governance around the KPIs so that monitoring is formalized and has a consistent cadence. This will help the bank to calibrate and maintain the launch of its open banking framework and then expand and scale over time. 

West Monroe continues to support your business after launch and sets up internal capabilities so that your bank becomes self-sufficient. You’ll be able to monitor progress yourselves and prioritize new use cases in the future. 

Embrace the future of banking 

Implementation is only the beginning. We know that your strategy will need to be refined based on new data. That's why we offer ongoing communication and iterative development that helps your team continue to stay agile. Through our four-phase methodology, we help our clients create opportunities to grow revenue through new channels, improve customer loyalty, build value via strategic partnerships, and design future-ready infrastructure.  

Open banking is a growing expectation among consumers. Your team may currently feel overwhelmed at the prospect of embracing open banking or unsure of where to start. Don’t go at it alone. Our strategic approach will help you leverage open banking and customer data in a way that protects your market competitiveness.