Digital Financial Services and Open Banking Innovation: Are Banks Becoming ‘invisible’?

Abstract

Digitalization in many economic sectors drove the financial system to adapt to new paradigms of technological transformation. Moreover, the extant regulatory framework forced the financial system to reconsider its business models and its relationship with the market. Such reasons generated also in the banking sector a new model of competition within the ecosystem never seen before in this sector. The new ecosystem of banks and financial institutions lacks a common framework that not only synthesizes the development lines of open innovation in the banking sector but also regarding the planification of strategic choices and organization within the new ecosystems. The present study aims to inquire into the strategic positioning of European banks toward their digital transformation strategies, by analysing the decision-making processes that occurred between 2015 and 2022. A qualitative analysis of partnerships and the adoption of Application Programming Interfaces (APIs) development in support of new service models was carried out. Results have relevant policy implications for regulators, linked to the business evolution and the risks of outsourcing, and managerial implications for the followers, specifically on the plan of service integration to diversify and boost their activities in the segment of customer relationship management and care, providing a better user experience.