Nationwide: Embracing Open Banking

Simon Hamilton, CTO, Nationwide Building Society

Embracing Open Banking

Simon Hamilton | Chief Technology Officer Nationwide Building Society | 05.2016

Agenda

Market Context 1

Driving Forces 2

3

Role of API Technology 4

Implications for Banks 5

Threat or Opportunity? Nationwide’s Priorities 6

Open Banking

Market Context Is Financial Services approaching an inflection point for an era of Open Banking?

•  Dominated by 16 clearing Banks •  700 regional Building Societies •  Emergence of mass-market products

and self service

•  Increased competition leading to consolidation

•  80% of Retail Banking controlled by 5 providers

•  Emergence of the internet and digital channels

•  Reduced barriers of entry •  Increased competition through

digital •  Provision of integrated digital

experiences

Banking De-regulation & Consolidation Mass Market Banking

What’s driving the trend towards Open Banking? Driving Forces

Customer expectations Regulation

IT innovation Economics

•  Digital adoption changing expectation of how and when they engage

•  Expectation set by leaders across industries and solutions

•  Banks still most trusted with financial data and services

•  Key barriers removed for sharing of data and execution of payments

•  Reduced barriers (financial and technology) for new market entrants

•  IT innovation encouraged and supported

•  Availability and capabilities of digital devices •  Amount of data available and maturing ability to

derive meaning and value from it •  Availability of APIs to connect across a broader

range of providers and solutions

•  Increased competition for the customers digital banking relationship

•  Quality of the digital experience provided a key differentiator

•  Increased value from the digital relationship

Threat or Opportunity? Is the emergence of Open Banking a threat or opportunity for established providers?

•  Increased competition to provide solutions that best meet customer needs and expectations

Customer trust?

Customer service?

Strategy & ability to execute?

•  Separation from the customers digital banking relationship

•  Leading to utilitisation and value erosion

•  Opportunities to drive innovation for customer benefit

•  Improve change agility and accelerate change

•  Opportunities to create new value customers and providers

Differentiation Disintermediation

API Technology Across sectors, what role does API technology play?

IT Innovators

•  APIs a fundamental part of how the leading IT innovators do business and create value

•  They drive how services are provide and change is delivered; Platform service models

•  Entirely new business models have emerged through their exploitation

Retailing

•  In other sectors such as Retail, leading providers have embraced API technology to drive e-commerce

•  Whole product catalogues opened up through APIs

•  The growth of the ‘everything retailer’

Banking

•  Underpinning the emergence of digital Neo-Banks

•  Established leading providers embracing APIs within their technology and business strategies

•  API standards emerging to facilitate a step-change in API exploitation

Implications for Banks What does Open Banking really mean for Banks if they are to succeed?

Creating a compelling digital banking experience

•  Be the best at enabling customers to pay, access accounts and services, manage their money and get help and support

•  Maintain trust and be first for service; digital and physical

Working and integrating with the digital ecosystem

•  New, more open approaches to innovation and partnering

•  Banking as-a-platform: Connecting to and exploiting a broader range of digital solutions

Moving beyond traditional Banking

•  Go further in helping customer get more value from their money and relationship with you

•  Look for new value opportunities; for customers and for the business

Nationwide’s Priorities What are our immediate priorities?

1.  Operationalising the API technology

•  The technology

•  The business and governance model

2.  Delivery against priority requirements; Regulatory and non-regulatory

•  PSD2 a priority

•  A roadmap of other opportunities

3.  Maturing our broader strategic response to Open Banking

•  Business strategy-led

Thank You