The second afternoon of this year’s congress took a broader look beyond open banking – towards open finance and how the open movement will affect other sectors. Eyal Sivan, Head of Open Banking at Axway and host of the Mr. Open Banking podcast, gave an engaging introduction to open banking, why consumers care about it (because it’s about money, not because it’s about data!) and what it is.
Eyal’s presentation took us through the differences between partnering, open APIs and open banking – with the use of standardised open APIs being the key ingredient of open banking. He explained how banks are being disrupted by the open banking movement, driven by consumer demand, technology challengers, and new rules and regulations. Open banking promotes competition, innovation and transparency.
Despite the clear challenges faced by incumbent banks, Eyal sees a rosy future for those that can adapt. As trusted custodians of money, banks are uniquely well-positioned to become trusted custodians of data in the digital economy. As more kinds of data open up, it’s an open everything future.
After the event, Eyal got back to us to answer some of the questions prompted by his presentation.
How long do you think it will take for open banking to be fully implemented around the world? Do you foresee any country not participating in the open banking regime at all?
I think it will take approximately 10-15 years to run its course – or at least to get to the stage where an underlying global foundation has been well established and we are ready to move to the next phase. I think all countries will ultimately be forced to adopt some sort of open banking regime, as it will eventually become part of the cost-of-entry to participate in the global economy.
Without a national law regarding data privacy (such as GDPR) should regulators be reluctant to develop open banking standards?
No, standards should be developed in parallel with the understanding that their development is iterative and based on developer feedback. The way modern API standards work, data privacy mechanisms can be added after the fact without much disruption to existing efforts. Moreover, members of the ecosystem will begin to understand that the standards are always being developed and improved.
A16Z says fintech is becoming pervasive and ubiquitous X-Tech. please comment
If you think it’s ubiquitous now, wait until open banking standards get well adopted. As the saying goes: you ain’t seen nothing yet!
If you could rename open banking to be more descriptive or a better consumer-facing branding, what would you chose?
I wouldn’t. Open banking is a perfectly good name, and arguing about names wastes time.