Why Open Banking Monetization Fails in Most Banks
Banks expose data through APIs but fail to operationalize it across lending, onboarding, and payments. The gap between "we have open banking" and "we make money from open banking" is wider than most executives realize.
The Monetization Gap: Exposure vs Operationalization
Annual open banking revenue in Europe, but distributed across fintech providers—not traditional banks— Accenture Open Banking Economics 2024
of banks have open banking APIs, but only 11% report them as a meaningful revenue source— Deloitte Banking Technology Survey
Average API utilization rate across incumbent banks vs 67% at digitally-native competitors— McKinsey API Economics Report
Reality Check: Traditional banks built the APIs. Fintechs are capturing the value. The difference? Fintechs operationalize open banking data into their core products from day one, while banks treat it as a separate capability.
Why Data Exposure Doesn't Equal Revenue
The typical bank open banking strategy: expose account and transaction data via APIs, create a developer portal, announce partnerships with fintechs, wait for revenue to materialize. The problem? Revenue never shows up.
According to EY's Open Banking Benchmark Report, banks that successfully monetize open banking share one characteristic: they use the APIs themselves first. Instead of building APIs for external developers, they embed open banking capabilities into their own lending, onboarding, and payment journeys.
What Doesn't Work
- •Building APIs and waiting for developers
- •Treating open banking as a compliance project
- •Separate teams for APIs vs business processes
- •No integration with lending or onboarding
- •Expecting third parties to create use cases
What Actually Works
- •Using APIs in your own products first
- •Embedding into lending decisioning flows
- •Automated identity verification in onboarding
- •Payment initiation in bill payment journeys
- •Transaction analysis for personalized offers
Why Banks Struggle to Monetize Open Banking
The gap between exposure and monetization comes down to organizational structure. Most banks treat open banking as a separate initiative—a compliance team builds the APIs, a developer relations team manages the portal, and business units continue operating as they always have.
The lending team still asks for physical payslips. The onboarding team still requests utility bills for address verification. The payments team still processes card transactions. Meanwhile, the open banking APIs sit unused because nobody embedded them into actual business workflows.
Organizational Gap
Open banking teams report to technology or compliance, not to business unit P&Ls. Without revenue accountability, APIs become engineering exercises rather than business capabilities.
Process Isolation
Business processes weren't redesigned around open banking data. Teams continue using old workflows with manual steps that open banking could automate.
Technology Silos
Open banking APIs exist separately from core banking systems, lending platforms, and CRM tools. Integration requires custom development for every use case.
External Focus
Banks optimize APIs for external developer adoption instead of internal business consumption, creating friction for their own teams to use the data.
Result: Banks announce open banking APIs but their own lending, onboarding, and payment teams never use them. Fintechs do—and capture the monetization opportunity.
The Three Monetization Failures
Failure 1: Building for Developers, Not Processes
Banks create developer portals with documentation, sandboxes, and SDKs—all the infrastructure for external developers. But their own lending teams still process loan applications with manual document verification.
The Problem: You optimized for adoption by unknown third parties while making it hard for your own teams to use the APIs in production workflows.
The Fix: Build integration into your highest-volume business processes first. Developer portals can come later—after you've proven internal ROI.
Failure 2: Waiting for External Revenue Before Internal Adoption
Banks announce partnerships with fintechs and expect revenue share from API usage. But without a proven value proposition (demonstrated by internal use), external partners see no reason to integrate.
The Problem: You're selling APIs without evidence they create value. Fintechs integrate with providers who've already proven operational impact.
The Fix: Use your own APIs to reduce lending TAT, improve onboarding conversion, or lower payment costs. Then showcase those results to partners.
Failure 3: Treating APIs as Products Instead of Capabilities
Open banking APIs become standalone products with their own roadmaps, pricing models, and support teams—disconnected from the business problems they should solve.
The Problem: APIs that don't directly improve customer journeys or reduce operational costs become cost centers, not revenue drivers.
The Fix: Embed open banking into existing product P&Ls. Measure success by lending conversion rates, onboarding completion times, and payment success rates.
Integration Enables Monetization: The Maturity Model
The banks winning with open banking didn't build better APIs—they built better integrations. They connected open banking data to their core banking systems, loan origination platforms, identity verification tools, and payment gateways so data flows automatically into business processes.
Critical Insight from McKinsey:
Banks that achieve open banking ROI within 18 months spend 70% of their budget on integration and orchestration, not API development. Those that fail spend 80% on API infrastructure and treat integration as an afterthought.
The Integration Maturity Model
Level 1: API Availability (Where Most Banks Are)
Open banking APIs exist and comply with regulations, but require custom development to use in any business process. No standardized integration layer.
Level 2: Point Integrations (Early Adopters)
Open banking connected to 1-2 specific use cases (like loan origination or identity verification), but each integration is custom-built and requires engineering for expansion.
Level 3: Orchestration Layer (Where Monetization Happens)
Open banking data flows automatically into all relevant business processes through a unified integration layer. New use cases can be activated without custom development.
This is where BankBuddy's platform operates—pre-built orchestrations for lending, onboarding, payments, and compliance that work out of the box.
Case Study: Retail Bank's Monetization Journey
European Retail Bank
Mid-size bank, 2M customers, traditional lending operations
Before: Compliance-Only Approach
- ✗ Open banking APIs live for 18 months
- ✗ 45 external API calls per month total
- ✗ Zero revenue attribution
- ✗ Loan applications still required document uploads
- ✗ 8-day average loan approval time
- ✗ 38% drop-off rate during application
After: Operationalized Integration
- ✓ Integrated into personal loan flow
- ✓ 12,000+ API calls per month (internal use)
- ✓ €4.2M annual cost savings identified
- ✓ Instant income verification via open banking
- ✓ 2.5-day average loan approval time
- ✓ 21% drop-off rate (45% improvement)
What Changed: Integration Before Promotion
Instead of marketing APIs to fintechs, the bank integrated open banking into their highest-volume process first: personal loan applications. They automated income verification, transaction analysis, and affordability checks using live banking data.
Within 6 months, loan origination costs dropped 67%, approval speed increased 3.2x, and conversion rates jumped 45%. Only after proving internal ROI did they package the capability for external partners—who now pay for access to the proven workflow.
Key Takeaway: The bank stopped treating open banking as a product to sell and started using it as a capability to improve their own margins. Revenue followed naturally.
From Compliance Asset to Revenue Engine
Most banks built open banking to satisfy regulatory requirements. The successful ones realized the real opportunity: using compliance-mandated infrastructure to transform their own operations.
Stage 1: Compliance
Build APIs, meet regulatory requirements, announce availability. Cost center with no revenue.
Stage 2: Operational
Integrate into internal processes, measure cost reduction and conversion lift. Demonstrates ROI.
Stage 3: Revenue
Package proven workflows for partners, license capabilities, create new products. Profit center.
The Strategic Shift
Stop asking "How do we monetize our open banking APIs?" Start asking "How do we use open banking to make our lending, onboarding, and payments more profitable?"
External monetization becomes possible only after you've proven internal value. No fintech will pay for APIs that even your own bank doesn't use.
How to Operationalize Open Banking for Revenue
Monetization happens when open banking data flows automatically into business processes that drive customer acquisition, retention, and revenue per customer. Here's how leading banks operationalize open banking:
1Embedded Lending Decisioning
Replace manual document collection with automated open banking data retrieval during loan applications. Analyze transaction history, income patterns, and existing obligations in real-time to make instant credit decisions.
Revenue Impact at Scale:
- • 60% faster loan approvals = 2.3x higher conversion rates
- • Automated income verification = 70% cost reduction per application
- • Real-time affordability checks = 40% lower default rates
- • Instant pre-approvals = 5x higher marketing campaign ROI
Example: A European retail bank integrated open banking into their personal loan flow and saw loan origination costs drop from $180 to $54 per application while increasing approvals by 45%.
2Instant Identity Verification in Onboarding
Use live bank account data to verify customer identity during account opening. Match customer details against transaction history, eliminating manual document checks and reducing fraud.
Revenue Impact at Scale:
- • 85% reduction in onboarding time = higher completion rates
- • Automated KYC = $12 saved per new customer
- • Real-time fraud detection = 75% fewer fraudulent accounts
- • Instant account opening = 3x higher same-day deposit rates
Example: A digital bank in Southeast Asia reduced onboarding from 3 days to 8 minutes using open banking verification, increasing customer acquisition by 340%.
3Payment Initiation for Collections and Recurring Payments
Enable customers to make loan repayments, bill payments, and recurring transfers directly from any bank account without card details or manual account linking.
Revenue Impact at Scale:
- • 50% reduction in failed payments = better cash flow
- • Lower payment processing fees = 30% cost savings
- • Instant payment confirmation = fewer disputes
- • Multi-bank payment options = higher completion rates
Example: A fintech lender replaced card payments with open banking payment initiation and saw loan repayment rates increase from 82% to 96% while cutting processing costs by 65%.
4Transaction Analysis for Personalized Products
Analyze customer spending patterns and financial health from open banking data to offer personalized products at contextually relevant moments—credit cards for frequent travelers, savings products after salary deposits, investment products for high-balance accounts.
Revenue Impact at Scale:
- • 6x higher conversion on personalized offers
- • 40% increase in products per customer
- • 25% higher customer lifetime value
- • Predictive churn detection = lower attrition
Example: A UK challenger bank used transaction analysis to identify customers likely to need overdraft facilities, proactively offering products with 8x better take-up rates than broadcast campaigns.
Understand the Integration Challenge
Learn about the hidden costs of open banking without proper integration and why orchestration matters more than API quantity.
Conclusion: Use Your Own APIs First
The banks that monetize open banking don't wait for external developers to create use cases. They embed open banking capabilities into their own lending, onboarding, and payment processes first. Once internal monetization proves out, external partnerships follow naturally.
According to Bain & Company's Banking Technology Study, banks that achieve open banking ROI within 18 months have one thing in common: at least 60% of their API calls come from internal systems. They use open banking data to transform their own operations before selling it to third parties.
The Monetization Formula
Step 1: Embed open banking into your highest-volume processes (lending, onboarding)
Step 2: Measure cost reduction and conversion improvement
Step 3: Expand to adjacent use cases (payments, collections, personalization)
Step 4: Package successful integrations as external APIs for partners
BankBuddy's platform comes with pre-built open banking orchestrations for lending, onboarding, and payments—so you can operationalize data from day one instead of waiting months to build integrations.
Start Monetizing Open Banking Today
BankBuddy's platform includes pre-built open banking orchestrations for lending, onboarding, and payments—operationalize your APIs from day one.