The European banking market is about to change.

By 2018 people across Europe will no longer be locked into their bank’s financial systems. They will be able access and use their bank accounts via third parties. This means that if a bank customer wants to pay a friend, compare products, or do any other type of standard financial activity, they can choose a provider to do this for them.

This is designed to increase competition, offer customers more choice, and kickstart innovation in financial services. The ‘Payment Services 2 Directive’ will open up local markets to exciting new entrants. And many of these new entrants will not be banks, and many of them don’t yet exist.

A more open banking landscape with new services and improved products will be great for customers. However, many will start to question the value that their bank provides. This has already happened in other countries. New challengers like Simple in the US or N26 in some European countries are delivering richer, more personal, truly mobile experiences.

“Banking is necessary, banks are not.”

As Bill Gates said, these services are proving that “banking is necessary, banks are not.”

The greatest immediate risk for banks is that they become the “dumb pipe”. They will still keep their customers, but the new banks will own the “experience layer”; everything from point of sale to balances and transactions will be conducted through the new bank’s interface. The traditional bank will just provide the underlying infrastructure. In losing access to these vital touch-points, banks will lose all of the associated valuable transactional data. And it’s this data that’s their best opportunity to retain customers, and, most importantly, to sell more profitable products like loans and credit cards.

Mark Carney, Governor of the Bank of England, believes there’s a wider, systemic risk to the banking sector. If customers move in large numbers to more user-orientated, ‘non-banks’ the liquidity of traditional banks could be impacted, which ultimately could undermine the banking system and how markets function.

Yes, the global economy could literally rely on your bank getting it’s online customer experience in good shape.

There’s real potential of disruption in the banking market. But there’s an opportunity and, more importantly, still time for established banks to protect their business by improving their offering. And if they do this right they could even capture more of the market.

Let’s see what success might look like.