FutureHack

In the times when everything is about speed and efficiency, when we are talking about Quantum computing - traditional banks seem like dinosaurs - they are big, slow-moving, and inefficient (costs, time-to-market, slow to innovate). However, banks have a tremendous amount of data, deep financial and regulatory knowledge, and relationships. Traditionally banks have enjoyed the monopoly on consumer data - which for consumers has implied fewer/few options for their banking and in terms of financial tools. However, things are starting to change with introduction of regulations like, SEPA, PSD2 (Payment Services Directive 2), GDPR, and XS2A etc. are pushing banks to be more transparent, open, collaborative, secure, and innovative. Though PSD2 is a European directive to advance the design of more secure/safer and innovative payment systems and services - it is the competition and access to data aspect that will eventually drive banks across the world to similar model. “One of the main features of the directive is that PSD2 applies beyond traditional banking. The regulation also acknowledges and regulates third-party providers (TPPs) like fintech app developers and merchants [like Amazon etc.]. These providers are now allowed to access user bank account data, aggregate accounts, and initiate payments (with the consumer’s permission, of course). In fact, as part of PSD2, banks are required to grant this access to TPPs.” This aspect of 3rd party access and opening up the banks to competition, leads (hopefully) banks to be more competitive - this is really good for the consumers because the market opens up for more options/products/services for consumers to choose from; Open Banking is all about that. Technologies like AI, Blockchain, and IoT will continue to evolve and give rise to new and innovative business models, products, and services - and hence even more disruption around the financial ecosystem - banks and the insurance industry. How can banks remain competitive with such operational overhead, legacy systems, and business models (not open to partnerships/innovation, etc) ? Does simply having APIs lead to innovation? Can modern technologies without sound strategies lead to success? For the Open Banking strategy to work for banks, they will need a well-thought-of Open Innovation strategy.

Built With

• api
• openbanking