The latest buzzword in FinTech is without a doubt “open banking”, but whether or not this becomes a lasting concept depends on a plethora of factors.
First of All, What Does Open Banking Mean?
A wiki stub may be all you need to put a name to “the use of open APIs that enable third party developers to build applications and services around the financial institution, greater financial transparency options for account holders ranging from open data to private data, and the use of open source technology to achieve the aforementioned”. And that name is… open banking.
Who’s Talking About Open Banking?
The biggest craze is, by far, in Europe, and that’s the doing of PSD2, but while EU’s changes in banking regulations were still being drafted, the UK jumped the gun establishing the Open Banking Work Group (OBWG), in September 2015.
Its purpose was (and still is) to analyze how data could be used in order to help everyone easily transact, save, lend, borrow and invest. In fact, it set out a standard for creating, sharing and using open banking data that we’ll definitely hear plenty about.
Where does the rest of the world stand in this picture? Here are some clues:
- “Monetary Authority of Singapore takes step towards open API architecture to bolster Fintech push” – 31 March 2016 (Channel News Asia)
- “South Korea is launching an open banking platform” – 13 August 2016 (Business Insider)
- “Brazil‘s Original Bank scoops ‘Most Disruptive Innovation’ award” – 31 October 2016 (EFMA)
- “Iran‘s first open banking API launched” – 7 January 2017 (Financial Tribune)
- “Canadian authorities jump on open banking bandwagon” – 2 March 2017 (Payments Compliance)
- “Japan‘s biggest bank to open banking processes to FinTech app developers” – 6 March 2017 (CryptoCoins News)
Still, Europe’s quasi-antipode, Australia, is probably the most surprising in the matter. How so? Well, the Australian House of Representative Standing Committee on Economics filed a report in November 2016 regarding future banking regulations imposed by what they called “the oligopoly of Australia’s banking sector”.
In short, the Committee reviewed the four major banks in Australia and came to the conclusion that competition must be improved. The steps recommended in this matter include, among others, the launch of a Banking Tribunal and the creation of a data sharing framework for consumers’ and small businesses’ data.
EU stands by what Australia managed to explicitly state, but does so with velvet gloves, since it is a delicate matter and banks are highly uncomfortable with this emerging concept. But the truth is… beating around the bush doesn’t do anyone any good. So let’s set sail!
After all, this whole open banking concept is in line with what Allevo first had in mind in 2011 when we spread the word that we intended to migrate to a more open business model. What we tried back then was to anticipate the evolution of the main actors in the financial ecosystem (whether vendors, banks or SMEs) and keep up with their pace. To this we say “so far, so good”.