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Australia’s ‘Big 4’ need to prepare for a customer-centric, open banking future

Australia’s new open banking regulatory environment is one of the fundamental forces defining the future of the industry. With open banking, bank customers can give accredited third parties permission to access their banking data, such as their savings, credit card, mortgage and loan data. This makes it easier for customers to search for a better deal on banking products and keep track of their banking in one place.

In this new landscape, every financial institution must be well prepared for a customer-centric future in order to thrive in the years to come.

The big four banks are slowly realizing how to optimise their products and services for a deregulated environment. But as was the case in the UK, we have seen compelling innovation from smaller, more nimble fintechs and neo banks. It is this innovation that has fuelled the rise of new banking segments in what was previously seen as a saturated market.

For their part, traditional banks have emerged into a position of stability despite recent economic pressures and have also invested in the core work of transformation over recent years. This must be seen as an overall positive, particularly in light of the negative impacts sustained by many other industries.

With a well-modernised operational baseline, now is the time for banks to prepare for a more agile future. Financial institutions should take more cues from the new entrants to the sector to take advantage of the new opportunities and segments generated through the new open banking ecosystem.

A competitive approach requires setting aside the command-and-control culture that has been a hallmark of the traditional banking sector. Customer-centric operations cannot iterate effectively in such environments and will be overwhelmed by faster innovators that respond to customer signals at the speed of digital.

New avenues of dialogue between product teams and change managers are required. Corporate leadership must set overarching strategic objectives to guide innovation—but then make room for product teams to test, analyse and adapt to the opportunities they uncover. This requires operational alignment across teams, as well as low-code/no-code tools, both of which hold great potential for rapid iteration while exploring new product areas.

Banks delivered admirable responsive capabilities during the pandemic, showing how quickly new processes could be adopted and adapted when there was urgency to do so. If they can find a path forward that enables more of the same, banks will unlock more opportunities to make fast-paced, data-driven decisions that will become the basis of new products that customers want to engage with.




The views and opinions expressed in this report are those of Cognizant and do not necessarily reflect the view and policies of Economist Impact. Data presented is from an Economist Impact executive survey, commissioned by Cognizant, conducted in early 2022.

 


Robert Marchiori

ANZ Head of Markets, Cognizant

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