SIBOS: DIGITAL INNOVATION
MAKING A SUCCESS OF
OPEN BANKING It’s taken them a while, but institutions are at last responding intelligently to regulation that’s liberated financial services, says Kanika Hope, Global Strategic Business Development Director at Temenos
According to the recently published Economist Intelligence Unit (EIU) report, A Whole New World: How Technology Is Driving The Evolution Of Intelligent Banking, businesses see open banking as the top strategic priority by 2025.
Forty-one per cent of respondents also consider acting as a true digital ecosystem as well as a hybrid model, aggregating third-party products in addition to providing their own, as the primary business models of the future. Both of these are classic open banking platform models that we are already seeing today, where banks collaborate with third-party manufacturers and distributors to provide services to their own and others’ customers. By 2025, respondents also see the biggest competition coming from technology and ecommerce disrupters, and from partnerships between these giants and fintechs, rather than from payment providers or peer-to-peer (P2P) lenders or fintechs on their own. This mirrors what we at Temenos observe in the industry today.
Regulators embrace innovation From a regulatory point of view, over the past year open banking has received a big boost across
the world. Regulators are promoting competition and innovation while driving application programming interface (API), digital identity and security standards. In other words, they are encouraging open banking initiatives, both directly and indirectly. Europe’s revised Payment Services Directive (PSD2) was the pioneering initiative. This, along with its own open banking standards, introduced by the Competition and Markets Authority, made the UK one of the first markets to mandate open banking. In Australia, the government’s open banking initiative mandates the four major banks to make banking data available to third-party providers (TPPs) by June 2019. The monetary authorities in Singapore and Hong Kong have been aggressively driving API standards in recent months. Canada is expecting to see similar initiatives, with the Canadian Bankers’ Association focussing on digital identity as a precursor to an open banking framework.
Open door onto the future; Banks are stepping through
Issue 13 | TheFintechMagazine
Fintech Finance presents: The Fintech Magazine Issue 13