Customize features with Open Banking

Next Generation Commercial Banking January 2022 - Find out how commercial banks are embracing open banking to keep pace with third-party financial service providers

Even in the face of a pandemic, businesses must continue to operate, despite challenges preventing employees from working from home and preventing them from interacting face-to-face. As a result, commercial banks have noted a demand for products and services that can make their customers’ financial processes faster, safer and more efficient.

The Bank of Montreal (BMO) was founded in a small rented house in 1817, making it the oldest bank in Canada. It is now one of the five largest banks in Canada and the eighth largest bank in North America, with over $988 billion in assets and over 12 million commercial banking customers. The banking industry has evolved significantly since BMO’s early days, but its goal of earning depositors’ trust remains the same, and open banking is a trend that makes it happen.

Open banking is based on application programming interface (API) technology, which allows banks and businesses to exchange and process data quickly and transparently without physical bank intervention. Such tools can benefit both businesses and their customers by reducing the risk of human error, freeing up treasurers for more strategic tasks, and saving time and money. Bank statements and notifications can be sent seamlessly 24/7, and payments can be issued automatically and directly from internal tools such as enterprise resource planning (ERP) programs ).

Open banking is also creating competition for traditional banks through the rapidly growing banking-as-a-service (BaaS) model. Financial institutions (FIs) and third-party companies can use shared financial data, allowing them to act as de facto financial intermediaries without the need for banking licenses. The result is that traditional banks are being challenged to rethink their digital services and products as corporate customers seek banking partners who can adapt their products and services to the accounting solutions they already use.

“Online banking is not a vacation destination. Our customers want in, out and in,” said Sean Ellery, Head of Digital and Innovation in Commercial Banking at BMO Financial Group.

Ellery said this has always been the case for business banking customers, as they typically have multiple competing demands for their time and attention. The added challenges of the pandemic, however, made it clear that BMO customers needed to focus on their business, not their banking.

Customizing Features

In an online chat last November, Ellery said BMO was hosting focus groups to get feedback on what customers were looking for in their banking services. The company found that customers not only wanted features, but also personalized experiences, such as alerts and automatic payment processing. Using real-time analytics, BMO revamped the digital customer experience of its commercial banking services to replicate the easy-to-use self-service options of its retail platform.

One of the biggest benefits of open banking, Ellery said, is that it allows the bank to explore different industry partnerships and integrations faster and with much lower risk, allowing the company to expand its offerings beyond the traditional online banking platform.

“Open banking helps us make banking easier for our customers,” he said. “We are able to create new innovative solutions within our existing infrastructure that allow our customers to automate certain tasks and obtain personalized and actionable information in real time.”

Data security is one of the main concerns of open banking, as it involves the sharing of financial and personal data with third parties. Ellery said that while BMO customers control their data, he likes to think the bank serves them in a custodial role. This means meeting or exceeding industry standards for authentication and protection of information and identities. Of course, another role of the bank is that of educator.

“Open banking and APIs are still new to many of our customers, so education is key,” he said. “We need to help them understand how their data is being used and shared, and what that opens up for them.”

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