Open Banking: The Emergence of New Digital Business Models

Open banking has recently been advanced as a measure to foster competition and innovation in the retail banking sector. Since its introduction in the UK, a number of banks have created new digital business models (BMs) that offer individuals and businesses access to more personalized financial services. Yet, it is still unclear what new entrants (smaller and newer banks) have done to potentially disrupt incumbents (larger and well-established banks). To shed light on the innovations in BMs that have been initiated by digital banks to move away from traditional retail banking BM, seven digital BMs operating in the UK financial sector were examined using the BM innovation analysis framework. Our findings suggest that innovation in the new digital BMs has been achieved by building on the existing retail banking activities, developing new digitally enabled activities, and leveraging open innovation activities. Implications of our findings for researchers, managers and policy makers will be outlined.