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Evolution towards Integrated Banking: 2025 – Future

Posted by KingEclient on 1 February, 2022

The first stage of open banking is already here, with banks investing heavily in the necessary technology infrastructure, forming alliances, and focusing on compliance to ensure that regulatory pressure does not reveal their current business model or expose them to competition.  


On the other hand, other banks have yet to adopt the open banking approach. This is a significant strategic flaw since becoming an open bank is only the first step toward becoming an organization that meets today’s digital customers’ financial and total digital lifestyle expectations. Digital transformation must now be an element of every financial institution’s short-term strategy. If traditional financial institutions do not achieve open banking, they will be unable to compete with market challengers and may be forced out in the future years.  


Becoming an open bank is only the first step toward becoming an organization that meets today’s digital customersexpectations


The banking business is rapidly changing, and the next stage is to move toward an integrated banking paradigm. This is the process of transforming the bank into a context-aware institution that will become a part of day-to-day financial choices and a provider of a wide range of new services and products by leveraging APIs and the infrastructure that has been built. In combination with disruptive technologies like IoT, 5G, Blockchain, and AI, open data will enable high-value solutions and new products.  


The bank will no longer be a provider but rather an integrator, advisor, and developer of “healthy clients” as part of the integrated banking paradigm, to establish a long-term connection. These customers will consume products and services that are well beyond what traditional financial firms have offered to date, creating a lifestyle experience where customers will use banking for mortgage or investment products, as well as for planning a trip, purchasing a physical product or getting advice on where to travel on holidays based on financial and non-financial data. 


With personalized services in a customer-centric environment, integrated banking is the next step in the collaborative open model. Keeping the customer at the epicenter of this digital environment will ensure the shaping and improvement of product and service design over time, as well as direct monetization of the API structure and consolidation of the new revenue streams.  


The success of this banking paradigm is heavily reliant on having intelligent and actionable insights from the start of open banking, which means that financial institutions will have to define, and more importantly, shape and educate their customers to provide the best product offering at the right time.  


Integrated banking will preserve various business models and methods, but banks must prepare for a collaborative, platform-based future. By studying a customer’s spending behavior, an AI-powered financial adviser might deliver preemptive financial guidance precisely at the time of need. Customers can use third-party connectors to conduct transactions outside of the traditional financial ecosystem (lifestyle, travel, insurance, transportation, and so on), allowing the bank to go above and beyond the usual transactional institution.  


Integrated banking also means that they will never have to leave the environment regardless of the user’s behavior. Instead, customers will be provided relevant items and services at precisely the correct point in their journey. This is what gives the actual consumer value. Banks may deliver far more appealing and competitive goods and services that go beyond traditional banking offerings and at a reduced cost to management by becoming genuinely digital at their core. 



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