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 along with the cooperation it can bring. The advantages of working together with alternative providers far outweigh the risks of loosening control, he states.
The movement to some more open and interconnected financial world has already begun, with clear steps taken in the the European Union as well as in Asian markets towards this goal. Europe’s Payment Services Directive (now in the second iteration, the PSD2) served because the kickoff shot on the continent. It opened up the banking system on the entry of so-called non-bank finance institutions (NBFI) , who have taken on large chunks from 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 struggling with downsizing pressures.
However, integration could possibly be taken much further, says Eyal Nachum . If we consider the Chinese giants Tencent and Alibaba, we have seen a model banks might wish to imitate to a degree. The two companies operate Super Apps, WeChat and Alipay, respectively, are much more than payment services. These are so-called “lifestyle apps” , which allow users to accomplish anything from ordering a taxi, through making interpersonal money transfers, to, in some Chinese provinces, paying electric bills and more. It’s easy to imagine the convenience that such centralisation brings.
According to Eyal Nachum , there is no need to consolidate everything in one place, but tighter integration is achievable and desirable. If we check out Singapore , we see the likes of DBS, one from the country’s leading banks, launching its very own car marketplace in partnership with sgCarMart and Carro. UOB , another leading Singaporean bank, recently launched its travel marketplace. These imaginative pursuits can be quite a lighthouse to European banks, who should employ whatever possible way to learn off their Asian counterparts, by way of example by means with the UK’s fintech bridges, which Mr Nachum recently discussed with all the Sunday Times.
Under the PSD2, European banks and finance institutions are mandated to provide application programming interfaces (API) , by which other financial institutions (like, for example, Bruc Bond ) can access data and issue authorised instructions on customers’ behalf. Sadly, most banks in Europe have done only the bare minimum to adhere to regulatory requirements for open banking, rather than explore how such initiatives might be incorporated into banks’ strategic plans. This is a short-sighted mistake, says Eyal Nachum .
Banks are missing out on an opportunity to supply their clients and customers using a service that will actually get people pumped up about banking. This is on their detriment and endangers their long-term prospects. To be competitive in 2020 and beyond, banks must accept the platformification of financial services. Users will soon come to expect it, and poorly prepared banks are affected as a result.
There are lots of paths with an open banking future, and each individual financial institution will need to go for itself which path will lead to the greatest prosperity. Some things, however, are evident. Trying to imitate the Chinese instances of Tencent and Alibaba will be foolish. The regulatory infrastructure is scheduled against it. Instead, we at Bruc Bond believe close, tight-knit cooperation between finance institutions, providers, local authorities and business provides the right path to a 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 within an article for the 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 basically be achieved by true, sustained openness. Regulators may help, by mandating information sharing, but the onus is around the actors inside the markets themselves to develop frameworks that encourage cooperation . These could possibly be limited schemes firstly, that grow deeper as trust develops. Doubtless, this may require some feats of the imagination, however when some with the brightest minds build relationships these issues, they might, we have been confident, come up with some creative solutions towards the issues that vex bankers . The next banking revolutions demands it.