From Open Banking to Open Everything
Open Banking was put centre-stage on Day One of the all-new Spotlight stage at Sibos 2019 with a series of quick-fire talks on thise most disruptive of topics.
Kicking off the first day on the Spotlight stage, Andrew McFarlane, Managing Director of Financial Services at Accenture, explored the challenges that banks, fintechs and consumers alike face in the era of Open Banking. McFarlane identified a key competitive area for financial institutions as Open Banking evolved: “In the future, all banks will offer their retail customers account aggregation services - and large corporates effectively already have Open Banking through their treasury services. We really feel where the future battleground will lie in the small business and small corporates space,” he said.
Up next, Gavin Littlejohn, Chairman of the Financial Data and Technology Association, provided insights on how Open Banking initiatives are progressing across the globe, painting a picture of a very fragmented environment with huge differences in maturity levels between markets. Littlejohn took us back to the early 2000s, when the US blazed a trail for Open Banking in the account aggregation space to the extent that US consumers are now by far the highest users of these services globally. The move in the US was market driven, he said, and other countries charted a similar course, most notably in Singapore.
By contrast, he noted that regulation has driven change in Europe with banks previously unwilling to open up their data to each other or to third-parties. Yet, despite the fact that the PSD2 deadline was passed earlier in September, he noted that there has been a far from uniform implementation with some countries yet to implement the regulation in full.
Next in the spotlight was Imran Gulamhuseinwala OBE, Trustee of the Open Banking Implementation Entity, the body that has overseen development and delivery of Open Banking in the UK. Speaking of the reforms, he said: "It’s still very early to say where we are with Open Banking in the UK, which is an experiment. 2020 will be the year for adoption in the UK, and there is a lot of discussion on how to extend Open Banking from just current accounts.”
Taking a step back, Gulamhuseinwala underlined the fundamental reasons why the UK ran with Open Banking so fast: “In our country around 2 million people pay too much for their overdraft, 2 million don’t get interest on their balances in their current accounts and 4 million can’t get access to credit. We want to try to use competition and innovation to fix this, and we think that Open Banking is the way to do it.”
After the break, Tony McLaughlin, Managing Director, Citi, delivered a call to action to the industry on the need to collaborate and develop the capabilities to embed services in platforms via standardised APIs. “We live in a world of platforms and it’s only just started. Financial services will be embedded in digital platforms – that’s for sure. But the question is: who will provide those financial services? Will it be the banks? Fintechs? Or the big tech platforms themselves?” he said. “Being digital in a world of platforms is not about having a fancy app, nor about having a blockchain proof of concept – it’s about whether your bank can service the financial needs of consumers and businesses on platforms.”
“The world of platforms is a dangerous world if you don’t show up,” McLaughlin warned. “And if you are going to show up, you must do so with APIs. Publishing your APIs is the equivalent of building your branches on the high street. We must come together to create the API standards that are required by the platforms,” he said.
Next, Kim Fournais, Founder & CEO of Saxo Bank, spoke about his experience of building one of the first platform businesses in finance since the bank was founded in 2001. Fournais underscored the critical need for banks to partner to succeed in Open Banking: “The real change is going to come from partnerships, changing our behavior and culture. When we work together, we find new opportunities, deliver projects much faster and ultimately benefit the client. We should specialisze on what we do really well and not try to do everything for everyone, everywhere.”
Closing up the second round of talks, Jason Bates, the Co-founder & Deputy CEO of 11FS emphasised that banks still have a way to go in their journey towards delivering truly digital experiences. “If you are going to create a new killer app for Open Banking then you can’t just digitise the service that for years has been available offline in branches or on paper. And neither is Open Banking just about aggregating accounts. Truly digital banking services are real-time, intelligent, contextual, human, extendable and social.”
Opening the last three talks of the day, Lisa Robins, Global Head, Transaction Banking at Standard Chartered, highlighted the opportunity that Open Banking presents the industry to transform disruptors into enablers. Robins underlined the fundamental importance of creating a frictionless and seamless customer experience: “Today we are curating experiences for our customers; we are collaborating with multiple platforms and fintechs to develop multiple APIs that offer customers the level of experience they now expect. This is only possible through API mash-ups. They allow us to bring everything together to give the customer a single API experience. Sometimes we are another option on someone else’s platform. We won’t always be a curator, we can be the curated, but we will be part of the customer experience. It’s all about delivering that frictionless experience.”
Next came, Sofia Ericsson Holm, Head of Strategic Partnerships and Open Banking at Nordea who commented on how the bank has built a developer platform for the bank and third-parties to improve and offer tailored services to their customers. “The key to building the platform was to create engaged developers, to give them a really awesome experience on our Open Banking platform.” Ericsson Holm also underlined the need to acutely focus on customer needs when in development: “We co-create services directly with our customers so we can prioritise their most important challenges and build the right solutions alongside fintechs and third-parties.”
Closing out the Open Banking day was a dual session from Colin Payne, Vice President & Head of NextGen Banking at Capgemini Invent, and Megan Caywood, Managing Director at Barclays. Payne opened the session by reiterating that, the recent changes in the market are only the start: “We are moving from Open Banking to open everything,” he said. Payne went on to explain how fintechs, big techs and new providers have broken up the banking value chain in recent years and taken chunks out of the value that banks have traditionally delivered.
In her talk, Caywood summed up the great changes that the industry has seen: “From a banking perspective, it’s a fundamental shift. People used to start out by getting a student loan, later a car loan, a credit card and a mortgage – they might have their entire financial life with one institution. Now open APIs and the new competitive ecosystem have given people a huge number of apps and options. But now this has become quite complex for people to manage,” she said. Caywood went on to explain that, instead of only offering one set of products and services end-to-end, banks are moving towards a model where they aggregate third-party services in order to curate better experiences throughout the customer journey.