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The Payment Services Directive 2 (PSD2) is a regulation for financial institutions since 2018. It is expected to significantly impact banks and their business models, requiring them to open-up and to share customers’ data with regulated third-party providers (TPPs), with the customers’ consent. PSD2 aims at increasing competition and innovation in the European Banking sector and at empowering customers with respect to their data.
A direct consequence of PSD2 is Open Banking, which has been at the forefront of much of the discussions concerning PSD2. It can be defined as the integration of financial service resources and Open Data, enabling new methodologies to deliver financial services to customers. (see Coste and Miclea, 2019, p.7)
The degree of openness varies across banks and is dependent on several internal and external factors. For instance, some banks will open up solely for compliance while others will use this opportunity to improve their strategy.
An important issue for practitioners and scientists, and which has been largely overlooked so far, is that of understanding the impact of PSD2, and particularly, Open Banking on banks’ business model. Several authors have studied the opportunities and challenges brought about by PSD2 and Open Banking (e.g. Gozman et al., 2018; Guibaud, 2015; Noctor, 2018; Omarini, 2018). They report, for instance, that the main opportunity of banks opening up is that it favors partnerships with core banking institutions and associated stakeholders, constituting the Open Banking ecosystem. In addition, “openness” provides a fertile basis for banks to rethink, redesign and eventually revamp their value chain, e.g: reducing costs, finding new revenue streams, and creating new products/ services. Concerning the challenges put forward by different authors, they include the lack of standardization, inadequate technological infrastructure, increased security (and reputational) risks, different customer expectations, more regulations to comply to, risk of disintermediation and new forms of competition.
From the foregoing discussion, it is clear that Open Banking could require a significant change in banks’ traditional business models, requiring them to become active participants in a platform-based ecosystem. Current business model conceptualizations in the literature (e.g. Campbell et al., 2017; Gasparin et al., 2020; Ghezzi & Cavallo, 2020; Teece, 2010) fall short of adequately capturing and explaining the inherent dynamics faced by banks and the regulatory environment. Popular business models (e.g. Campbell et al., 2017; Teece, 2010) overlook the process for banks to evolve into a platform ecosystem. Furthermore, the increasingly important role of stakeholders in the ecosystem, e.g. FinTechs, has to be incorporated in banks’ business models.
In our research, from a theoretical perspective, we seek to challenge and amend the prevailing conceptualizations of business models towards one that is suited for the banking context. From a managerial and practical perspective, it aims at providing guidance to market participants as to the challenges and opportunities that come with the transition towards a platform-based business model. Therefore, as our main contribution, we propose an adapted Business Model Canvas (BMC) based on Campbell’s enhanced BMC (2017). We aim to address two research questions: