Open banking: a lesson in collaboration at HSBC

A banking revolution is coming in January. “Open banking” will allow customers to share their financial data between banks, allowing the creation of new types of smart banking services. Big banks initially thought they’d lose customers to start-ups better able to adapt to the new age - but increasingly see it as a unique digital opportunity.

HSBC is positioning itself at the forefront of the change. In October, it announced a move into open banking with HSBC Beta, a trial that will allow 10,000 UK customers to see accounts from different banks on a single screen, before a broader rollout.

While HSBC’s Beta pilot will allow customers to see accounts offered by 21 of the largest banks, the initiative sits alongside close work with smaller fintech firms - as part of a broad collaboration strategy.

Working with fintech startups is essential for us

HSBC is already partnering with a number of fintech startups, including Tradeshift, a supplier expenditure management firm. The banking giant has also invested in an anti-fraud startup and works with other partners on its apps. HSBC’s Technology Advisory Board identifies emerging trends in the market and a £200 million investment fund helps it push cash into the most appropriate startups.

Raman Bhatia, UK and Europe digital head for HSBC

Raman Bhatia of HSBC says it has spent $1.5 billion to facilitate joined-up banking

Raman Bhatia, UK and Europe digital head for HSBC, says that over the last three years the bank has spent over $1.5 billion on digital transformation, creating application programming interfaces (APIs) and building related capabilities. The APIs allow joined up experiences within its own services and with those of other companies.

“Working with fintech startups is essential for us, and we were the first bank to publish APIs ahead of the open banking deadline,” Mr Bhatia says. “When you look at open banking, at the centre of it is the aim to foster a new ecosystem, which we want to be front and centre of.”

Such collaborations allow both big banks and startups to derive substantial benefits, according to Mr Bhatia: “As well as co-developing branded and white label services, by open sourcing our APIs we can go out to development communities and create new offerings. This is the long term vision of HSBC Beta.”

The resulting combination is the best of scale and niche innovation. “We have 30 million customers globally, which startups can potentially access, alongside working with us on testing products and services,” Mr Bhatia explains. “For us, we can learn from startups and bring in their deep thinking and expertise in specific areas.”

“Our thinking is that we are open to partnerships which work for us and for fintech firms,” says Mr Bhatia. “Of course, different banks are at different levels of maturity in this area. We are clear though that trying to do everything on our own is not pragmatic.”

You can never stand in the way of a better experience

HSBC has partnered with Bud for an app that will bring together information from across a user’s bank accounts. Ed Maslaveckas, co-founder and chief executive of Bud, a financial app platform that will be tested by 10,000 users through deep integration with bank technology, says these technology linkups show how “you can never stand in the way of a better experience”.

Bud’s platform works by bringing together data from financial firms on savings, loans, insurance and many other services to allow people to more easily manage their money. The business capitalises on the many opportunities brought in by the open banking regulation, linking into banks’ technology to create an all-in-one digital experience for multiple services.

Bud co-founder and CEO Ed Maslaveckas

Bud co-founder and CEO Ed Maslaveckas

“Customers aren’t necessarily eager to change their bank, but we know they are ready to change how they bank if it means finding better experiences,” says Mr Maslaveckas. “Over the course of the past few decades, we’ve gone from having a local bank manager helping people handle their finances, to phone banking, to internet banking and then to mobile banking. The changes taking place in the market mean the different parts of the ecosystem have to work together much better, to deliver more of what customers want.”

The work between banks and fintech firms is becoming ever more important. Small and large tech firms are battling for consumers’ attention, at a time when consumers are set to gain the ability to use disparate services from a single platform. For banks similar to HSBC, the only way to ensure continued success is through smart collaboration.


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