IDEAS home Printed from https://ideas.repec.org/a/spr/futbus/v10y2024i1d10.1186_s43093-024-00397-3.html
   My bibliography  Save this article

Optimal data-driven strategy for in-house and outsourced technological innovations by open banking APIs

Author

Listed:
  • Vinicius Dezem

    (Federal University of Santa Catarina)

  • Swati Sachan

    (University of Liverpool Management School, Finance and Accounting)

  • Marcelo Macedo

    (Federal University of Santa Catarina)

  • André Longaray

    (Federal University of Rio Grande)

Abstract

Open banking is a customer consent-driven data-sharing framework to maintain interoperability among financial and non-financial institutions through secure application programming interfaces. Traditional retail banks are losing their competitive edge against digital banks, FinTech, and BigTech firms due to a higher outflow of customer account data than inflow. These firms capitalize on open banking data to launch innovative products and introduce “ready-to-deploy” Banking-as-a-Service platforms for end-to-end banking operations without the need to build full-scale infrastructures. Therefore, banks must reshape data-driven strategies to stay competitive. This research proposes a decision-support tool to select optimal digital strategies using the Strategic Value Index (SVI), a metric derived from analyzing multiple strategic objectives of bank stakeholders. The SVI minimizes implementation time and costs while maximizing operational action importance to a balanced digital strategy that combines both in-house and outsourced technological developments. The importance of operational action is quantified using evidential reasoning with fuzzy logic to address the challenge of aggregating incomplete and ambiguous banking data and assessments from multiple stakeholders. The theoretical approach is validated through a real application in a Latin American bank, and its findings are globally transferable. Cost and time data were sourced from public repositories, as made available accessible through government-mandated disclosures. The sensitivity analysis revealed that hybrid in-house and outsourced development is more flexible in meeting tight timelines and budget constraints. The combined approach is more cost-effective, time-efficient, and aligned with the internal needs of banks compared to either entirely in-house or fully outsourced models.

Suggested Citation

  • Vinicius Dezem & Swati Sachan & Marcelo Macedo & André Longaray, 2024. "Optimal data-driven strategy for in-house and outsourced technological innovations by open banking APIs," Future Business Journal, Springer, vol. 10(1), pages 1-30, December.
    • Handle: RePEc:spr:futbus:v:10:y:2024:i:1:d:10.1186_s43093-024-00397-3
    DOI: 10.1186/s43093-024-00397-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1186/s43093-024-00397-3
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1186/s43093-024-00397-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Barak, Sasan & Javanmard, Shima, 2020. "Outsourcing modelling using a novel interval-valued fuzzy quantitative strategic planning matrix (QSPM) and multiple criteria decision-making (MCDMs)," International Journal of Production Economics, Elsevier, vol. 222(C).
    2. Valeria Stefanelli & Francesco Manta & Pierluigi Toma, 2022. "Digital financial services and open banking innovation: are banks becoming invisible?," Papers 2210.01109, arXiv.org, revised Oct 2022.
    3. Massimo Preziuso & Franziska Koefer & Michel Ehrenhard, 2023. "Open banking and inclusive finance in the European Union: perspectives from the Dutch stakeholder ecosystem," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-27, December.
    4. Standaert, Willem & Muylle, Steve & Cumps, Bjorn, 2020. "Opening the gates: A framework for an open banking strategy," Journal of Digital Banking, Henry Stewart Publications, vol. 4(4), pages 364-376, March.
    5. Ferrari Minesso, Massimo & Mehl, Arnaud & Stracca, Livio, 2022. "Central bank digital currency in an open economy," Journal of Monetary Economics, Elsevier, vol. 127(C), pages 54-68.
    6. He, Zhiguo & Huang, Jing & Zhou, Jidong, 2023. "Open banking: Credit market competition when borrowers own the data," Journal of Financial Economics, Elsevier, vol. 147(2), pages 449-474.
    7. Laura Grassi & Nicolas Figini & Lorenzo Fedeli, 2022. "How does a data strategy enable customer value? The case of FinTechs and traditional banks under the open finance framework," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-34, December.
    8. Alexander Kuan Daiy & Kao-Yi Shen & Jim-Yuh Huang & Tom Meng-Yen Lin, 2021. "A Hybrid MCDM Model for Evaluating Open Banking Business Partners," Mathematics, MDPI, vol. 9(6), pages 1-19, March.
    9. Lambert Kofi Osei & Yuliya Cherkasova & Kofi Mintah Oware, 2023. "Unlocking the full potential of digital transformation in banking: a bibliometric review and emerging trend," Future Business Journal, Springer, vol. 9(1), pages 1-18, December.
    10. Preziuso, Massimo & Koefer, Franziska & Ehrenhard, Michel, 2023. "Open banking and inclusive finance in the European Union: Perspectives from the Dutch stakeholder ecosystem," EIF Working Paper Series 2023/94, European Investment Fund (EIF).
    11. Minwir Al-Shammari & Mehdi Mili, 2021. "A fuzzy analytic hierarchy process model for customers’ bank selection decision in the Kingdom of Bahrain," Operational Research, Springer, vol. 21(3), pages 1429-1446, September.
    12. Bär, Fred & Mortimer-Schutts, Ivan, 2020. "Innovation in open banking: Lessons from the recent wave of payment institutions that have been authorised to provide payment initiation and account information services," Journal of Payments Strategy & Systems, Henry Stewart Publications, vol. 14(3), pages 268-285, September.
    13. Ma, Yong & Yao, Chi, 2022. "Openness, financial structure, and bank risk: International evidence," International Review of Financial Analysis, Elsevier, vol. 81(C).
    14. Omarini, Anna, 2020. "FinTech: A New Hedge for a Financial Re-intermediation. Strategy and Risk Perspective," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 3, pages 1-11.
    15. Pedro G.C. Pio & Tiago Sigahi & Izabela Simon Rampasso & Eduardo Guilherme Satolo & Milena Pavan Serafim & Osvaldo L.G. Quelhas & Walter Leal Filho & Rosley Anholon, 2023. "Complaint management: comparison between traditional and digital banks and the benefits of using management systems for improvement," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 73(4), pages 1050-1070, May.
    16. Guibaud, Sophie, 2016. "How to develop a profitable, customer-focused digital banking strategy: Open banking services and developer-friendly APIs," Journal of Digital Banking, Henry Stewart Publications, vol. 1(1), pages 6-12, May.
    17. Chang, Da-Yong, 1996. "Applications of the extent analysis method on fuzzy AHP," European Journal of Operational Research, Elsevier, vol. 95(3), pages 649-655, December.
    18. Fang, Jianyu & Zhu, Jialiang, 2023. "The impact of open banking on traditional lending in the BRICS," Finance Research Letters, Elsevier, vol. 58(PA).
    19. Hochman, Harold M & Rodgers, James D, 1969. "Pareto Optimal Redistribution," American Economic Review, American Economic Association, vol. 59(4), pages 542-557, Part I Se.
    20. Murinde, Victor & Rizopoulos, Efthymios & Zachariadis, Markos, 2022. "The impact of the FinTech revolution on the future of banking: Opportunities and risks," International Review of Financial Analysis, Elsevier, vol. 81(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Leogrande, Angelo & Arnone, Massimo & Costantiello, Alberto, 2024. "Banking Credit and Innovation Technology: a Global Perspective," SocArXiv mnd4f, Center for Open Science.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhuang Liu & Xingyi Li & Zhongfei Li, 2024. "Inclusive FinTech, open banking, and bank performance: evidence from China," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 10(1), pages 1-24, December.
    2. Laura Grassi, 2024. "In a world of Open Finance, are customers willing to share data? An analysis of the data-driven insurance business," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 14(3), pages 727-753, September.
    3. Wang, Haijun & Mao, Kunyuan & Wu, Wanting & Luo, Haohan, 2023. "Fintech inputs, non-performing loans risk reduction and bank performance improvement," International Review of Financial Analysis, Elsevier, vol. 90(C).
    4. Ivan Radanovic, 2024. "Contemporary data sharing models: open banking and open finance," Working Papers Bulletin 24, National Bank of Serbia.
    5. Shang, Xiaoting & Niu, Huayong, 2023. "Does the digital transformation of banks affect green credit?," Finance Research Letters, Elsevier, vol. 58(PB).
    6. Vuković, Darko B. & Hassan, M. Kabir & Kwakye, Bernard & Febtinugraini, Armike & Shakib, Mohammed, 2024. "Does fintech matter for financial inclusion and financial stability in BRICS markets?," Emerging Markets Review, Elsevier, vol. 61(C).
    7. Benyou Jia & Slobodan P. Simonovic & Pingan Zhong & Zhongbo Yu, 2016. "A Multi-Objective Best Compromise Decision Model for Real-Time Flood Mitigation Operations of Multi-Reservoir System," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 30(10), pages 3363-3387, August.
    8. Rosenzweig, Mark R. & Wolpin, Kenneth I., 1984. "Externalities, Heterogeneity and the Optimal Distribution of Public Programs: Child Health and Family Planning Interventions," Bulletins 8435, University of Minnesota, Economic Development Center.
    9. Pasura Aungkulanon & Walailak Atthirawong & Pongchanun Luangpaiboon & Wirachchaya Chanpuypetch, 2024. "Navigating Supply Chain Resilience: A Hybrid Approach to Agri-Food Supplier Selection," Mathematics, MDPI, vol. 12(10), pages 1-42, May.
    10. Juan Carlos Martín & Veronika Rudchenko & María-Victoria Sánchez-Rebull, 2020. "The Role of Nationality and Hotel Class on Guests’ Satisfaction. A Fuzzy-TOPSIS Approach Applied in Saint Petersburg," Administrative Sciences, MDPI, vol. 10(3), pages 1-24, September.
    11. Matthew Malloy & Francis Martinez & Mary-Frances Styczynski & Alex Thorp, 2022. "Retail CBDC and U.S. Monetary Policy Implementation: A Stylized Balance Sheet Analysis," Finance and Economics Discussion Series 2022-032, Board of Governors of the Federal Reserve System (U.S.).
    12. Drakopoulos, Stavros A., 2008. "The Concept Of Comparison Income: An Historical Perspective," MPRA Paper 8713, University Library of Munich, Germany.
    13. Cebula, Richard, 1973. "Interstate Migration and the Tiebout Hypothesis: An Analysis According to Race, Sex, and Age," MPRA Paper 49827, University Library of Munich, Germany, revised 01 Feb 1974.
    14. Wang, Yi-Ran & Ma, Chao-Qun & Ren, Yi-Shuai, 2022. "A model for CBDC audits based on blockchain technology: Learning from the DCEP," Research in International Business and Finance, Elsevier, vol. 63(C).
    15. Glazer, Amihai & Konrad, Kai A., 1993. "Ameliorating congestion by income redistribution," Regional Science and Urban Economics, Elsevier, vol. 23(5), pages 579-584, November.
    16. Sajid Ali & Sang-Moon Lee & Choon-Man Jang, 2017. "Determination of the Most Optimal On-Shore Wind Farm Site Location Using a GIS-MCDM Methodology: Evaluating the Case of South Korea," Energies, MDPI, vol. 10(12), pages 1-22, December.
    17. Hoang, Yen Hai & Ngo, Vu Minh & Bich Vu, Ngoc, 2023. "Central bank digital currency: A systematic literature review using text mining approach," Research in International Business and Finance, Elsevier, vol. 64(C).
    18. Andrej Sokol & Michael Kumhof & Marco Pinchetti & Phurichai Rungcharoenkitkul, 2023. "CBDC policies in open economies," BIS Working Papers 1086, Bank for International Settlements.
    19. Choudhary, Devendra & Shankar, Ravi, 2012. "An STEEP-fuzzy AHP-TOPSIS framework for evaluation and selection of thermal power plant location: A case study from India," Energy, Elsevier, vol. 42(1), pages 510-521.
    20. Umara Noreen & Attayah Shafique & Zaheer Ahmed & Muhammad Ashfaq, 2023. "Banking 4.0: Artificial Intelligence (AI) in Banking Industry & Consumer’s Perspective," Sustainability, MDPI, vol. 15(4), pages 1-16, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:futbus:v:10:y:2024:i:1:d:10.1186_s43093-024-00397-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.