Open Finance: Strategies and Opportunities in 2023

The Swiss financial market is opening up to the future! In December 2022, the Federal Council launched an initiative to help Open Finance make a breakthrough in Switzerland. This will enable a whole range of digital innovations that will benefit all stakeholders – customers and financial institutions alike.

The Federal Department of Finance is now formulating goals for this, such as creating common standards, opening up interfaces, and offering scalable solutions. They are all intended to ensure that the framework conditions for Open Finance in Switzerland are sound.

Open Finance lays the foundation for yet another new, customer-centric world of financial services. By opening up access to financial data and account functions, third-party providers can develop a wide range of products and services for financial customers – and provide access to them via their regular bank account.

This includes Open Banking, i.e. services related to account information (e.g., data evaluation) and account functions (e.g., payment initiation), which provide the basis for services such as multibanking. In fact, multibanking improves these services even further by allowing customers to manage third-party accounts centrally via their bank’s e-banking system. The comprehensive database with access to all account transactions enhances the quality of analytics and personalised offers.

Contovista actually already offers multibanking and uses the Swiss bLink ecosystem for this purpose. Beyond Open Banking, Open Finance also includes insurance companies, pension funds and, at first glance, non-banking services.

In the future, customers will be able to manage everything to do with their finances, and in some cases even beyond them, on the same platform – and at their main bank. They will enjoy a convenient digital user experience, real-time service when applying for a loan, for example, and relevant personalised offers. In turn, financial institutions increase their efficiency, reduce costs, drive sales and, last but not least, boost customer satisfaction.

With this initiative, the Federal Council is adopting a market-based approach that relies on the industry’s initiative instead of regulatory requirements such as those imposed by the EU (PSD2). Industry representatives and researchers welcome this approach. Nevertheless, the pressure on the industry is mounting: if targets are not met by June 2024, regulatory intervention may still be required.

This data definitely represents regulatory urgency for financial institutions. Of course, banks should not wait until 2024 and the developments that ensue – the benefits of Open Finance are already too great for them to position themselves in the increasingly fierce competitive environment of digital banking: the time to act is now!

However, digital investments cost both time and money. To ensure particularly efficient and rapid implementation, institutions can also opt to work with a proven expert like Contovista. For us, this topic is nothing new – Open Finance has been part and parcel of our DNA from the very outset. We’ve been developing API-based financial management tools and associated business models since 2013. Made in Switzerland, for Switzerland. In fact, we actually introduced multibanking options all the way back in 2019.

From a technical perspective, implementation is straightforward, fast, and secure for banks. The same applies for customers, assuming they grant their consent to the services. It goes without saying that this digital opening only takes place with the customer’s express consent.

The goals for Open Finance 2024 have been formulated, the go-ahead has been given, and a wide range of use cases has already been rolled out on the Swiss market. Many more are planned and will follow. So, where do we go from here? Here are some examples of the future agenda:

• Based on the precise customer profile, personalised product recommendations can be made that are really relevant and valuable for users. These include financial products from the bank itself as well as products from external providers.
• With access to comprehensive, real-time account data, loans can be offered at precisely the right time and for the right amount where there is a specific need.
  At the same time, account data analytics provides customers with tips and insights that help them keep their finances under control – this is an important contribution to helping them maintain financial health.
• Beyond Banking turns the bank’s e-banking system into a useful control centre for consumers. They receive tailored offers for travel, insurance, or rental cars, can obtain vouchers, and can take advantage of bonus and customer loyalty programmes.
• If the house bank rejects a loan or card application, it could still be taken over by another institution. In return, the bank receives a broker commission, similar to the way an affiliate would be paid.

The end result for banks is overwhelmingly positive. Open Finance enables a bank to generate more sales and raise its profile through relevant offerings. The bank opens up the world of Open Finance to customers and offers them a high-quality, digital user experience. As a result, customer loyalty is increased, the bank becomes a central first bank again, and is able to survive in today’s competitive digital environment.

Customers continue to place a great deal of trust in banks – and this trust is more than deserved thanks to the customer-centric service provided by Open Finance. And so Open Finance brings us full circle: rather than digitalisation posing a threat to established institutions, it actually helps to secure their future viability.

You want to position your bank for the future? That’s great! So how can Contovista help you? Well, we support you on your journey into the world of Open Finance in the form of consulting and workshops with our technological expertise and customised Open Banking solutions, which are integrated into the existing e-banking system.

The Personal Finance Manager (PFM) provides customers with a personalised financial cockpit with a multibanking option and relevant tools such as a Carbon Footprint Manager. The Business Finance Manager (BFM) with a multibanking option provides business customers with digital capabilities such as liquidity planning with real-time data along with an easier overview and analytics options. Our Enrichment Engine analyses and categorises transaction data, providing the basis for data-driven banking, supported by forward-looking technologies such as artificial intelligence and analytics.

We are constantly developing and improving these solutions, and users reap the benefits immediately. With Contovista as your partner, you are perfectly positioned for future developments – and are already taking advantage of the benefits that Open Finance will bring to the financial world of tomorrow.