How does a data strategy enable customer value? The case of FinTechs and traditional banks under the open finance framework

Abstract

The coupling of data and digital innovation opens the way for new business in the financial services sector, where customers are placed at the centre of decisions and data can help to develop customer knowledge. To carry out our research, we adopted a multi-case study approach to explore how a data strategy is developed in the retail banking industry, together with its relationship with customer value, paying particular attention to the heterogeneity between traditional banks and financial technology companies (FinTechs). Two main points emerged from the study. Firstly, there are three possible approaches to Open Finance, which are mainly defined by their different corporate cultures, organisational configurations, technological architecture and data value. Secondly, it is not enough to be a FinTech to be best placed to exploit the market, as some traditional banks share the FinTechs’ approach to Open Finance. Designing new tailored products, customising their prices and offering them over the right channels through targeted communication are all data-driven initiatives that stem from cross- or up-selling potential, core to the retail banking industry for turning a customer into a cash flow, thus enabling value to be created for customers. Our findings additionally revealed that there is a form of external information asymmetry between the customer and the bank, and that there is also an internal asymmetry between bank departments, as their visibility on information about the same customer may differ.

In a world of Open Finance, are customers willing to share data? An analysis of the data-driven insurance business

“…advanced vs emerging economies), as was previously the case with Open Banking (Rastogi et al, 2020). What we believe, however, is that the financial industry can only go in the direction of placing the customer at its core (Grassi et al, 2022a), and the sharing and willingness to share Open Finance-enabled data will set the tone. The competitive evolution in the financial industry will also be played out in this setting, with an increase in Fintech and Insurtech startups.…”

“…This corpus of regulations is intertwined with the Open Finance framework, whose arrival in the financial industry has placed customers and their willingness to share data at the centre of operations in a range of services, from banking and insurance to asset management (De Pascalis, 2022;Grassi et al, 2022a;Standaert & Muylle, 2022). On the contrary, in the past with Open Banking, the only sphere involved was bank account information (Chan et al, 2022).…”

The Influence of Liquid Collateral Types and Credit Processes Through Digital Marketing On Customer Decisions To Take Cash Collateral Credit at Bank ABC

“…In addition to customers who already have credit at Bank ABC, there is also a potential market to be introduced by CCC, namely where companies or government agencies whose pay rolls use Bank ABC (Grassi, Figini, & Fedeli, 2022).…”

Open banking and inclusive finance in the European Union: perspectives from the Dutch stakeholder ecosystem

“…In the context of the PSD2, the literature has already pointed out that the risks for the vulnerable sectors of society will undoubtedly increase once it moves from banking to the entire financial sector and then to other economic industries, according to the European Commission's push on Data Strategy and Open Finance (Grassi et al 2022). This implies an increase in the complexity of the financial ecosystems.…”