Open Banking – the perfect storm to shake up banking as we know it

11-05-17 10:38 | Digital banking | The Digital Hub

This might be the first time in history when an industry is being forced to open up without the possibility of having an agreement with its counterpart. And, even though PSD2 is leading to the biggest technological innovation in retail banking since the internet,  it’s only one piece of a giant puzzle.

A wise man called it a game-changing cocktail, and I couldn’t agree more. On a stand-alone basis, PSD2 probably wouldn’t change much. However, at the same time many new players are entering the market, and mobile payment and instant payment solutions are popping up all over the world. Then we have The General Data Protection Regulation (GDPR) which tells us that customers now fully own their own data. These are all pieces of the Open Banking puzzle.

Will the funny acronyms level the playing field?

XS2A (an acronym for Access to Accounts, which gives a whopping hit on Google) is about rights to access account information and the initiation of payments by third parties (TPPs). This changes the landscape so that we can access our accounts not only through the channels the banks offer –  mobile, online banks or file transfer  –  but also using new services created by third parties.

Which is great – it means I don’t necessarily have to rely on the services offered by banks, and I can pick and choose whatever suits me the best. These services are of course already present in the market, and I expect many more to come.

However, the new feature is that these services and their providers will be regulated. Now you might think that regulation to be boring, it’s very much needed to make payments secure and to protect customers. The word “Open” means “as open as I like” – not complete uncontrolled access to everything and anything. We can’t sacrifice our security and protection to open up for innovation –  we need to find a way to do both.

When opportunity knocks we should open the door

I see this as a great opportunity, as it will create competition and boost innovation. I’m sure most bankers would agree with me. It will turn the channel thinking upside down, for sure. But, banks should not protect their channels and try to be the only ones providing innovation.

As customers and users we increasingly demand new and innovative services, to use 24/7 and in real time. This indicates that a need to make the most of the joint innovation power of Fintech and more traditional financial industry players.

I look forward to new partnerships and, being the banker that I am, collaborating with others to create amazing customer value.

At the end of the day I’m a customer myself and I look forward to getting some amazing apps regardless of who makes them.

In terms of who the winners will be in Open Banking, my money is on the customers.

/Camilla Bäck, Senior Business Developer working in nordeaopenbanking.com

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