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 to embrace open banking as well as the cooperation it might bring. The advantages of working together with alternative providers far outweigh the potential risks of loosening control, according to him.
The movement to some more open and interconnected financial world has already begun, with clear steps taken both in the European Union plus Asian markets towards this goal. Europe’s Payment Services Directive (now in the second iteration, the PSD2) served because kickoff shot about the continent. It opened the banking system for the entry of so-called non-bank financial institutions (NBFI), who have taken on large chunks with the labour previously made 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 fighting downsizing pressures.
However, integration may be taken much further, says Eyal Nachum . If we consider the Chinese giants Tencent and Alibaba, we see a model banks may wish to imitate to some degree. The two companies operate Super Apps, WeChat and Alipay, respectively, less difficult more than payment services. These are so-called “lifestyle apps” , that allow users to perform anything from ordering a taxi, through making interpersonal money transfers, to, in some Chinese provinces, paying utility bills and more. It’s all to easy 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 to Singapore , we view the likes of DBS, one in the country’s leading banks, launching a unique car marketplace in partnership with sgCarMart and Carro. UOB , another leading Singaporean bank, recently launched its very own travel marketplace.
These imaginative pursuits is usually a lighthouse to European banks, who should employ whatever way you can to learn using their Asian counterparts, for example by means from the UK’s fintech bridges, which Mr Nachum recently discussed with the Sunday Times.
Under the PSD2, European banks and banking institutions are mandated to deliver application programming interfaces (API) , by which other loan companies (like, for instance, Bruc Bond ) can access data and issue authorised instructions on customers’ behalf. Sadly, a majority of banks in Europe did only the bare minimum to abide by regulatory requirements for open banking, rather than explore how such initiatives may be incorporated into banks’ strategic plans. This is a short-sighted mistake, says Eyal Nachum .
Banks are missing an opportunity to supply their clients and customers with a service that can actually get people excited about banking. This is on their detriment and endangers their long-term prospects. To compete in 2020 and beyond, banks must accept the platformification of monetary services. Users has decided to come to expect it, and poorly prepared banks will suffer as a result.
There are numerous paths to a open banking future, and every individual standard bank will need to decide for itself which path will lead to the greatest prosperity. Some things, however, are clear. Trying to imitate the Chinese samples of Tencent and Alibaba can be foolish. The regulatory infrastructure is set against it. Instead, we at Bruc Bond believe that close, tight-knit cooperation between loan companies, service providers, local authorities and business provides the right path to your bright future .
Such integration offers solutions for the many woes gone through medium and small-sized businesses (SMEs) due the upheavals inside the European banking industry, which Mr Nachum recently wrote about in an article for your Global Banking & Finance Review .
To reach utopia, however, we should build trust. Trust, we mean, between customers and institutions, and between institutions themselves. This can basically be achieved by true, sustained openness. Regulators might help, by mandating information sharing, however the onus is about the actors within the markets themselves to develop frameworks that encourage cooperation . These might be limited schemes to start with, that grow deeper as trust develops. Doubtless, this might require some feats from the imagination, however, if some in the brightest minds engage these issues, they might, we’re confident, think of some creative solutions for the issues that vex bankers . The next banking revolutions demands it.
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