A combination of competition from GAFAs and Fintechs and new regulations like PSD2 opened the gates to the new world of Open Banking. Retail customers benefited first. How can banks tap into the potential of their SME and Corporate clients?

Until now, the majority of European banks have shown a greater interest in Open Banking for Retail customers rather than Small and Medium-Sized Enterprises (SMEs) or Corporates. GAFAs have played an important role in the steering this trend because they have always been closer to the Retail segment.

Nevertheless, globally, 79% of banks planned in 2017 to invest significantly in Open Banking or Payment Services Directive (PSD2) related initiatives before the end of 2018. European banks have long struggled to serve the needs of SME customers while generating acceptable profits and Open Banking may provide an answer.

In an Accenture study focused on opportunities within SME banking in Europe, a third of SME clients expressed dissatisfaction with their bank. The study also showed that there is a huge, untapped potential in SME banking, with 20% of SMEs happy to pay an additional monthly fee for value-added services and 60% open for deeper engagements with their bank.

What's the trend in Belgium?

Belgium has followed the European trend and Open Banking use cases are more mature in the Retail segment, such as account aggregation, Payments & Banking services and finally housing services, which are slowly emerging.

Meanwhile, the number of SMEs in Belgium has increased by 28% in nine years with 550,000 enterprises recorded in 2016. Belgian banks are catching on to this potential. Examples include KBC Corporate banking signing a cooperation agreement with two Belgian Fintechs (Cashforce and BrightAnalytics) while ING ventures invested €7.5 million in the Fintech Cobase, helping international (commercial) customers to manage multiple bank accounts. Fintechs themselves are also beginning to target this segment and services such as ibanFirst allowing companies to better manage their international transactions are already offered on the Belgian market. 

Rule #1: Understand the Open Banking needs of commercial customers!

When Accenture polled 660 bank customers for their take on Open Banking for the commercial sector, this revealed an immediate opportunity for banks to help their customers extend their reach and expand their ecosystem while at the same time improve their own revenue and market share. To make this happen, banks must excel at meeting and understanding the Open Banking needs of commercial customers better than their hungry competitors do.

There are clear differences between the expectations of SMEs and Corporates when it comes to size, budget, culture and capabilities. But the reasons for going down the Open Banking route are the same. Payments, cash management and finance are three common areas that could be most improved for SMEs and Corporates in partnership with their bank.

For example, Xero, offering cloud-based accounting software, helps SMEs establish new financial services using its open API. Cash flow and expense management are improved, without the need of any third-party tools. Customers are easily connected to trusted lenders, using the online market place and the growing app market helps them to be more productive. As Xero connects with more than 16,000 accounting and bookkeeping firms over +180 countries, it is a true example of an ecosystem that keeps on growing.

4 ways banks can use Open Banking innovation to their advantage for commercial customers

  • As explained above, the first rule of using Open Banking innovation is to gain a 360-degree overview of commercial clients and truly understand what added value SMEs and Corporates are looking for. Only then can banks develop the right products and give these customers access to data they could not have accessed before.
  • Secondly, monetize Application Programming Interfaces (APIs) through joint offering developments with platform providers and Fintechs.
  • Thirdly, create revenue-sharing ecosystems with Third Party Providers (TPPs) to boost network expansion and cross-selling opportunities.
  • Finally, offering banking as a platform (developing ecosystems with Fintechs and others) or as a service (using bespoke APIs to amplify the power of distribution and the ability to connect to multiple banks) will generate a network effect and bring cross-selling opportunities.

How Accenture supports banks in their end-to-end Open Banking journey

In Belgium & Luxembourg, Accenture is strongly engaged to support our banking clients in their open banking adoption helping key players define their strategy across lines of business and creating an actionable roadmap adapted to their specific business context. To bring inspiration and acceleration to these engagements we leverage our Innovation Architecture to organize co-creation workshops where our local clients can interact with global leaders, ventures and partners.

Want to know more about Accenture’s Open Banking offerings? Read the full report and don’t hesitate to contact Axel Mahy or Adrien Kirschfink for a chat!