Steve Boms, President, Allon Advocacy and Advisor to Envestnet | Yodlee
How will the increased use of open APIs shape the financial services market, and how will it impact different market players in both the short- and long-term?
Open Banking, powered through Open APIs, puts the consumer, who is now fully empowered to use their own financial data to take advantage of whatever products or services they choose, at the center of the financial services ecosystem. In this new, innovation-driven environment, those market players that provide solutions to consumers where they most demand them will flourish, whether they are traditional banks or fintech firms. Incumbency will no longer be a significant competitive advantage.
Which activities should banks be prioritising in the wake of open banking?
The first order of business remains ensuring that the APIs that power Open Banking are up and running and reliable so that consumers can fully benefit from the new ecosystem.
What opportunities does Open Banking present, and which commercial strategies will thrive in the new environment?
The beauty of Open Banking is that we don’t yet know its full potential; we only know that the benefit to consumers will increase in the long run. Over time, it will enable account information and payment use cases driven by consumer demand that we couldn’t envisage today. Who would have imagined just 10 years ago that we would be able to conduct almost all of our personal banking using a mobile phone? While we can’t know what the technology landscape will look like 10 years from now, the Open Banking ecosystem provides the consumer the right to use their financial data in whatever manner they choose, and ensures that banking services will be provided wherever they will want to use them.
How can firms overcome the security and privacy concerns associated with data sharing?
Open Banking is a triumph of collaboration among all of the stakeholders – banks, policymakers, consumers, and fintech firms – to create an ecosystem that addresses the security and liability issues associated with data sharing in the banking sector. Beyond Open Banking – a framework under which these issues have been painstakingly addressed – it is only through this type of determined, exhaustive, private/public sector collaboration that these types of concerns can be adequately addressed.
What are the best strategies to encourage customer engagement?
Financial management is an emotionally charged topic. While traditional PFM tools offer consumers the convenience of getting a consolidated view of their finances, they don’t provide personal guidance and recommendations on next steps. This lack of guidance is a key contributor to lack of engagement. Next generation tools that use data analytics and domain expertise to provide contextual education and personalised recommendations have a much higher likelihood of engaging consumers and empowering them to improve their financial outlook.
Why will you be speaking at Finance Edge's Open Banking Summit, and what do you hope to get out of the event?
As Open Banking became a reality in the UK earlier this year, all of us with a stake in its success must ensure continued dialogue. Finance Edge’s Open Banking Summit is one of the best opportunities for such critically important stakeholder engagement.