The journey from open banking to embedded finance to contextual banking and the future role of banks

If you look at today’s bank customers, they are always digitally active in their respective living environments. McMakler provides an example of positioning in customers’ living environments. If people search for design ideas for self-built furniture on Pinterest, for example, McMakler displays real estate offers that match their known living preferences. This happens in the context of a cooperation between McMakler and over 400 banks. Under certain conditions, banks can therefore offer their services in the respective living environments of their customers. However, this option is only one alternative as to how banks or individual banking divisions can position themselves strategically. In Stefan Knaus’ blog post from October 24, 2023, we presented four different strategic role profiles in the context of open banking. Now we would like to take a look at current market developments and which use cases have driven banks forward. We will also classify the terms “embedded finance” and “contextual banking”, which are frequently used in this context.

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Recommended role profiles in the context of open banking for Swiss banking groups

The third and final part of this series of blog posts examines the suitability of strategic role profiles in the context of open banking (individualist, producer, distributor, and platform) for Swiss banking groups. The article illuminates that the size, business environment and geographical focus of the individual financial institutions have a significant influence on the choice of a suitable open banking strategy. It also presents business models of the future and analyses how big banks, cantonal and regional banks and private banks could position themselves with their service offering in the future.

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Strategic Role Profiles in the Context of Open Banking for Swiss Banks

In the context of Open Banking, four different role profiles can be distinguished that banks can assume: Individualist, Producer, Distributor and Platform. The role profiles are differentiated with regard to the distribution and creation of services and allow banks to put together a tailored, new business model in the individual banking areas. In the second part of this three-part blog post series, the individual role profiles will be described in detail and their impact on a bank’s business model will be illustrated.

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Implications of Open Banking for the Business Model of Banks 

In order to implement Open Banking, the European Union has been pursuing a regulatory-driven approach with PSD2 since 2018. In contrast, Switzerland is currently one of the few countries like the United States, Argentina, South Africa, and China to pursue a market-driven approach. However, last December, the Swiss Federal Council addressed Swiss financial institutions with a clear message and wants to accelerate developments around Open Banking. The first part of this three-part blog post series presents the impact of Open Banking on the business model of Swiss universal banks.

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