Speaking with global banking leaders last month at the annual Web Summit conference, all agreed that the future of banking will be defined by these very consumers. The reality is, though, that banks don’t have many touchpoints with consumers anymore and ultimately provide a utility service: consumers check their balances weekly or pay their mortgages annually.

SwissCognitiveFor payments, it’s far more likely consumers use unregulated apps like Venmo and PayPal. In Singapore, for example, ride-sharing provider GrabApp built a mobile wallet directly in its app, which customers use to digitally pay for their rides or split bills at restaurants. These external banking services will only grow more frequent as we move into 2018.

People don’t need banks – they need banking

Consumer banks in the future will be curators of services, rather than sole providers of services. They will be responsible for finding the right match to meet customer needs—whether internally or externally. Within the next five years, one banking leader believes his organization will sell more of other companies’ products than its own. Instead, the organization will become a marketplace.

Some banks are starting to take action in this direction. In preparation for the UK’s open banking regulation (PSD2) set to go into effect January 2018, HSBC recently announced it’s the first UK bank to release an aggregate Beta app that brings in data from 21 rival banks. If successful, HSBC will serve as a marketplace where customers can manage all their bank accounts. Fairly quickly, I hope HSBC leaders look at other products and services that they can offer customers through the same channel and look at it from an affiliate perspective. It needs to be about more than just bank balances and instead about building an ecosystem of products that are best for the consumer.

Banks need to open up

For banks to compete effectively in the digital era, they need to unbundle and build an ecosystem around their core value. This entails unlocking their core systems and data—such as customer, transaction and behavioural information—and offering it up as services for internal and external developers to leverage. For example, a bank offers loan origination as a vertical product, but should also offer things like appraisals and background checks for third-party fintechs. In creating an open ecosystem, banks can join other value chains to drive new sources of revenue, offer customers more holistic experiences and compete effectively. […]