Eyal Nachum of Bruc Bond to Banks – – Embrace Openness

Eyal Nachum, Bruc Bond’s fintech guru and board member , features a message to banks: it’s time and energy to embrace open banking and the cooperation it could bring. The advantages of working together with alternative providers far outweigh the risks of loosening control, he admits that.
The movement to your more open and interconnected financial world has already begun, with clear steps taken in the European Union and in Asian markets towards this goal. Europe’s Payment Services Directive (now rolling around in its second iteration, the PSD2) served because kickoff shot for the continent. It showed the banking system to the entry of so-called non-bank loan companies (NBFI) , who may have taken on large chunks with the labour previously produced by banks. Rather than hurting banks, NBFIs have reduced banks’ workload while introducing additional revenue streams, providing a much-needed buoyancy float to your sector experiencing downsizing pressures.
However, integration could be taken much further, says Eyal Nachum . If we consider the Chinese giants Tencent and Alibaba, we see a model banks may want to imitate to your degree. The two companies operate Super Apps, WeChat and Alipay, respectively, are much more than payment services. These are so-called “lifestyle apps” , that allow users to complete anything from ordering taxis, through making interpersonal money transfers, to, in a few Chinese provinces, paying utility bills and more. It’s an easy task to imagine the convenience that such centralisation brings.
According to Eyal Nachum , there is no need to consolidate everything in one location, but tighter integration may be possible and desirable. If we look for Singapore , we see the likes of DBS, one from the country’s leading banks, launching its car marketplace in partnership with sgCarMart and Carro. UOB , another leading Singaporean bank, recently launched its travel marketplace. These imaginative pursuits can be a lighthouse to European banks, who should employ whatever way you can to learn off their Asian counterparts, by way of example by means in the UK’s fintech bridges, which Mr Nachum recently discussed with all the Sunday Times.
Under the PSD2, European banks and financial institutions are mandated to supply application programming interfaces (API) , through which other loan companies (like, as an example, Bruc Bond ) can access data and issue authorised instructions on customers’ behalf. Sadly, most banks in Europe did only the bare minimum to comply with regulatory requirements for open banking, instead of explore how such initiatives may be incorporated into banks’ strategic plans. This is a short-sighted mistake, says Eyal Nachum .
Banks are losing an opportunity to provide their clients and customers with a service that may actually get people excited about banking. This is to their detriment and endangers their long-term prospects. To be competitive in 2020 and beyond, banks must accept the platformification of economic services. Users will soon come to expect it, and poorly prepared banks will suffer as a result.
There are numerous paths to a open banking future, and each individual standard bank will need to decide upon itself which path will lead for the greatest prosperity. Some things, however, are evident. Trying to imitate the Chinese samples of Tencent and Alibaba can be foolish. The regulatory infrastructure is scheduled against it. Instead, we at Bruc Bond feel that close, tight-knit cooperation between loan companies, agencies, local authorities and business can provide the right path to some bright future .
Such integration provides solutions for the many woes gone through medium and small-sized businesses (SMEs) due the upheavals inside European banking industry, which Mr Nachum recently wrote about in a article for that Global Banking & Finance Review .
To reach utopia, however, we must build trust. Trust, we mean, between customers and institutions, and between institutions themselves. This can simply be achieved by true, sustained openness. Regulators can help, by mandating information sharing, however the onus is around the actors within the markets themselves to develop frameworks that encourage cooperation . These might be limited schemes firstly, that grow deeper as trust develops. Doubtless, this might require some feats in the imagination, however, if some of the brightest minds build relationships these issues, they can, we have been confident, come up with some creative solutions for the issues that vex bankers . The next banking revolutions demands it.