Open Banking: regulatory “shot in the arm” drives global initiatives

Evolution of new infrastructures gaining traction in multinational banking sectors, say market participants

By Michael McCaw | 18 May 2018

Open Banking initiatives, cultures and internal structures are taking off throughout the banking world, driven by regulation, consumer demand and banks making a transition into the next phase of the sector’s evolution, say market participants.

“We have Open Banking initiatives from the regulatory side – which has really been the shot in the arm, the fuel on the fire – from Australia, Malaysia, Singapore, Hong Kong, Brazil’s looking at open API, initially potentially starting in the lending platform,” according to Christian Ball, head of retail banking, at GFT. “Of course we have markets where there isn’t an Open Banking regulatory platform such as North America but we have a number of clients who are embracing it… And of course in Europe we’ve got PSD2.”

“There aren’t many areas of the world not looking at Open Banking,” he added. Ball was taking part in a bobsguide webinar, along with Michael Maier, co-founder of Fidor Bank, and Louise Beaumont, co-chair of the Open Banking Working Group.

New customer experiences, banks having the ability to monetize their data and evolve their internal processes were among the attractions organizations identify with Open Banking, said Ball.

He said a number of banks have started to think about their offerings as fluid services, as opposed to rigid products – which will offer customers better banking experiences. Fast movers such as BBVA and Fidor are already pushing those boundaries.

“We’re moving to a world where – through the power of open APIs and other religions of choice – we’ll be receiving hyper personalized, predictive services which flex and flow around us dynamically, based on the data we are choosing to share,” said Beaumont.

Financial services in general – and banks in particular – need to organize in order to prepare to be able to fulfil these new market requirements, the panel agreed.

Ball suggested firms that rely on older internal structures will need to break down existing silos, and consider reshaping teams that create ideas and develop new experiences.

“Banks should understand that this is about creating an environment in which everybody wins,” said Beaumont. “Functions shouldn’t be thought of as getting in the way. So investment functions, procurement functions, partnering functions, for example, need to work in a way that facilitates the bank participating positively within the ecosystem.

“You need to be innovative, be different,” said Maier. “We’ve faced other megatrends in other sectors – from coproducing from the client sharing industry, collaboration, and with Open Banking you’re creating a new ecosystem. When you’re defining a new ecosystem you need to find new ways of collaborating and sharing.”

He went on to explain that financial institutions must embrace the new narratives around Open Banking, and trying new things could be the difference between success and failure.

“It’s a greenfield. You need to be brave, it’s a cultural thing,” he said. “Compliance and regulation give you guidance, but the good thing about being in a greenfield is that you have some room for interpretation. If you’re not being agile and you’re not willing to try something out then you will fail.”

To listen to the full webinar now, click here.

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