To ensure smooth implementation of open banking, we need to listen to the voices of different segments in the industry.
Open banking holds free exchange and data sharing at its core. Likewise, its implementation will require free exchange between the important industry players: banks, fintechs, regulators.
Recognising this, leading UK and European banks will together assess the impact of the PSD2 and Open Banking Standard at the 2018 Retail Banking Innovation conference (RBI). Participating banks include Barclays, Lloyds Banking Group, HSBC, Royal Bank of Scotland, Metro Bank, TSB and Virgin Money from the UK. Continental banks include BBVA, Citi Bank, Credit Suisse, Deutsche Bank, Nordea and Santander.
Voices of the fintechs
Big players can draw media attention and conference invites. However, it is also important to listen to the voices of the smaller, innovative players. Victor Trokoudes, Co-founder and CEO of UK-based fintech Plum, made some interesting comments on the implementation on Jan 9.
He hopes that open banking will ‘bring full transparency to the financial services.’ A data driven economy, will encourage banks to start using customer data to actually benefit the customer. Trokoudes points out how ‘banks in the UK have been so defensive that most of them had clauses in their T&Cs that prevented people from sharing their data.’
One predicted transformation is that banks will become a commodity across which money flows. The value will no longer be provided by them. Instead, banks will more openly compete in services.
Open competition will benefit customers as banks will be required to increase transparency as to the costs of borrowing, overheads and insurance, among other things.
The UK fintech Plum predicts the market will see ‘a host of new providers coming to the fore in the wake of Open Banking.’ New entrants will differ from traditional banks by acting more like financial advisors. Plum itself is a chatbot which helps people manage their financial lives. The new element in the market is the ‘added value’ management of finances from increased transparency. For more open banking developments, click here.
By Grace Appleford, Research Analyst for Holland FinTech.