Table of Contents

1. EXECUTIVE SUMMARY 2
1.1. Marketplace banking will significantly alter the financial landscape 2
1.2. Key findings 2
1.3. Critical success factors 2

2. CURRENT STATUS OF OPEN BANKING INITIATIVES 8
2.1. The CMA has set a deadline of January 13, 2018 for implementing open access to data 8
2.2. The OBS is set to go live in Q1 2019 10
2.3. Work continues to ensure PSD2 will come into effect in January 2018 10
2.4. The US remains behind the UK and the EU with respect to open banking initiatives 11
2.5. The MAS is promoting open APIs 12
2.6. Consumers are largely unaware of the concept of open banking 12

3. MARKETPLACE BANKING IN DETAIL 14
3.1. Marketplace providers challenge traditional banking structures 14
3.1.1. Marketplace banking is ideally suited to new entrants 14
3.1.2. Consumers will be presented with a safe environment for choosing and using products 15
3.1.3. Marketplace banks can choose the level of integration of third-party services 17
3.2. Marketplace banking offers new ways to generate revenues 17
3.2.1. Access fees 18
3.2.2. Commission fees 18
3.2.3. Data-driven revenue 18
3.2.4. New revenue sources will be particularly advantageous for new entrants 18
3.3. Marketplace banking offers significant opportunities for providers 19
3.3.1. New entrants can become viable quickly and cheaply 19
3.3.2. Established banks can improve their product ranges cost-effectively 19
3.3.3. Banks can convert fintech providers from threats into allies 20
3.4. There are a number of threats associated with marketplace banking 20
3.4.1. Risks associated with data control and security are magnified 20
3.4.2. The GDPR imposes clear data handling rules on banks 21
3.4.3. Banks risk weakening their customer relationships 22
3.4.4. Brand identities may become diluted 22
3.4.5. Banks will lose direct control over product ranges 22
3.5. New entrants are already using the marketplace banking model 23
3.5.1. Starling Bank has the most advanced open API strategy in UK banking 23
3.5.2. N26 in Germany has partnered with several providers to expand its product range 25
3.6. How should incumbents respond? 27
3.6.1. Why should established banks adopt a marketplace strategy? 27
3.6.2. What potential problems should marketplace banking practitioners be aware of? 28
3.6.3. What factors should be considered when adopting a marketplace strategy? 28

4. APPENDIX 30
4.1. Abbreviations and acronyms 30
4.2. Definitions 30
4.2.1. API 30
4.2.2. Open banking 30
4.3. Bibliography 30
4.4. Further reading 31

List of Tables
Table 1: Timetable for implementation of PSD2 11

List of Figures
Figure 1: Timetable for the CMA's remedies for open banking 9
Figure 2: Marketplace banks can choose passive or active approaches to product promotion 16
Figure 3: Starling Bank is preparing to become the first UK bank to open its API to third parties 24
Figure 4: Starling Bank is the first UK provider to allow full access to customers' transactional data via its API 25
Figure 5: N26 has co-branded its third-party services 26

Companies Mentioned
N26
Starling Bank