Open Banking Loyalty A qualitative study on customer loyalty in retail banking.

Abstract: Purpose: This paper investigates how open banking is thought to influence customer loyalty in a retail banking context. The study is limited to the established banks on the Swedish market and aims to illustrate how banks perceive and react to open banking, and what this means for customer loyalty in retail banking. Methodology: Semi-structured interviews were conducted with open banking managers for expert insight into open banking strategies for the banks, and branch managers for insights into the practicalities of banks’ loyalty efforts. These findings were analysed using an abductive approach. Findings: Loyalty was understood as being based on customers’ share of wallet while open banking was thought to increase customers’ multi-brand loyalty, which challenges the banks’ current perception that loyal customers are synonymous with full-range customers. While PSD2 was considered an important catalyst for open banking, it was not regarded as an important part of the perception of open banking. Conclusions: Established banks’ pursuit of full-range customers – and the definition of loyal customers likewise being full-range customers – is problematic as it stands in contrast with developments in the retail banking industry. Furthermore, while the industry is moving towards banking-as-a-platform, established banks are reluctant to embrace this change fully, opting for a cautious approach grounded in a need to stay profitable throughout the transition.