Navigating the Era of Open Banking: The Opportunities and Threats of Open Banking - a Case Study of Nordea and the Open Banking Ecosystem

Abstract: Regulatory changes and shifts in technology enabled the rise of Open Banking. In this paper, we examine the opportunities and threats implied by Open Banking on traditional banks and the strategies on how to navigate the era of Open Banking, using Nordea as an example. To get a differentiated perspective on our research questions, we conducted 20 in-depth interviews with various stakeholders in the Open Banking ecosystem. In these interviews, we recognized five major opportunities of Open Banking for traditional banks. These are premium APIs, embedded finance, account aggregation, data analytics, and trust. Furthermore, the five key threats we uncovered are increased competition in payments, losing the customer-facing position, technological change, data security, and fraud concerns. Lastly, we identified four strategies to navigate the era of Open Banking; to comply, compete, expand, or transform, and provide examples of these strategies in practice. The interviewees suggest taking an offensive strategy where banks seize the opportunities, manage the threats, and consider future regulations.