6 months ago when I was interviewing for my current role, I was told to write an article on the above. Prior to that, I’d never heard of Open Banking, heck, I knew nothing about banking. As at then I was working as a HR officer and an Artist & Label Services Executive in a media & entertainment firm lol but I was determined to get the job, so I read and read and tried to make sense of open banking and how it relates to HR in any way.

6 months in and I understand things better, I think I’ll write this article differently now with the knowledge I’ve gained so far, but here are Jemima’s fresh thoughts on Open Banking and HRM.

Impact of Open Banking on HR

Open banking is the practice of sharing financial information electronically, securely, and only under conditions that customers approve of with third-party financial service providers. The crux of open banking is the concept that customers can control and manage the sharing of their data, and banks should not prevent the movement of information and customers. It is a system under which banks open up their application programming interfaces (APIs), permitting third parties to access financial information needed to develop new apps and services and providing account holders greater financial transparency options. 

If open banking is being practiced, customers can approve for their banks to share their data with third parties and this data can be utilized by other banks, fintechs, asset management firms, personal financial management companies, and other financial service providers to access the customers’ transactions across all financial institutions and third parties. This will enable key players to provide tailored products and services to meet the financial needs of the customers. 

The potential benefits of open banking include improved customer experience, new revenue streams, and a sustainable service model for underserved markets.(1) Open banking will help to boost healthy competition within the financial services industry. Large, established banks will be forced to be more competitive with smaller and newer banks and fintechs, and this will result in lower costs, better technology, and better customer service. 

Currently, Nigerian fintech startups have to be compelled to either use platforms like Flutterwave, Mono, Paystack & Okra to access customer data or collect login information of customers and scrape the data off the screen  The main aim of open banking in Nigeria is not to eliminate the need of these platforms, but to set standard APIs so these players can access the data they need with the approval of the customer.

Human Resources Management is a strategic, coherent, and comprehensive approach to the management and development of the organization’s human resources in which every aspect of that process is wholly integrated within the overall management of the organization.(2) Human Resources is a key part of operations that focuses mainly on the lifecycle of an employee, from recruitment to exit. In the banking sector, human resources is very important as top talents must be recruited and trained to understand the intricacies of the job. In a competitive sector as such, talent retention is almost impossible and that’s why employee satisfaction is key. 

If open banking becomes adapted in Nigeria, I think the major change it would have on Human Resources will be in terms of recruitment. If the process of getting access to customer data becomes less tedious, more fintech firms with a focus on personal finance management will spring up and this will lead to job creation.

With open banking, employers who are keen on the integrity of their staff and how they manage their resources can access a list of bad debtors and identified fraudulent people. With time, this can be a deterrent for criminal activities as people know that this data can prevent them from gainful employment.

Finally, the adaptation of open banking in Nigeria can see traditional banks embracing digital options, this, in turn, will lead to reduced need for some staff such as tellers as fewer people would need to physically go to the bank. Since more employees would be required to work remotely, the skills and talents to look out for during recruitment & selection will be redefined. 

Reference:

1. Brodsky L., Oakes L., (2017, September 5). Data sharing and open banking. Retrieved from (https://www.mckinsey.com/industries/financial-services/our-insights/data-sharing-and-open-banking)

2. (UKEssays. (November 2018). Human Resource Management and External Environment. Retrieved from https://www.ukessays.com/essays/business/human-resource-management-and-external-environment-business-essay.php?vref=1).

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