Eyal Nachum of Bruc Bond to Banks: Embrace Openness
Eyal Nachum, Bruc Bond’s fintech guru and board member, includes a message to banks: it’s time to embrace open banking and the cooperation it could bring. The advantages of using the services of alternative providers far outweigh the potential for loss of loosening control, according to him.
The movement to your more open and interconnected financial world has recently begun, with clear steps taken both 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 around the continent. It opened up the banking system to the entry of so-called non-bank finance institutions (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 with a sector being affected by downsizing pressures.
However, integration may be taken much further, says Eyal Nachum. If we consider the Chinese giants Tencent and Alibaba, we view a model banks may decide to imitate with a degree. The two companies operate Super Apps, WeChat and Alipay, respectively, tend to be more than payment services. These are so-called “lifestyle apps” , that allow users to do anything from ordering a taxi, through making interpersonal money transfers, to, in most Chinese provinces, paying utility bills and more. It’s simple to imagine the convenience that such centralisation brings.
According to Eyal Nachum, you don’t have to consolidate everything in one place, but tighter integration may be possible and desirable. If we turn to Singapore, we percieve the likes of DBS, one of the country’s leading banks, launching a unique 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 from their Asian counterparts, as an example by means in the UK’s fintech bridges, which Mr Nachum recently discussed using the Sunday Times.
Under the PSD2, European banks and financial institutions are mandated to provide application programming interfaces (API) , in which other banking institutions (like, by way of example, Bruc Bond) can access data and issue authorised instructions on customers’ behalf. Sadly, most of banks in Europe have inked only the least to conform to regulatory requirements for open banking, in lieu of explore how such initiatives can 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 using a service that will 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 quickly come to expect it, and poorly prepared banks will suffer as a result.
There are lots of paths to a open banking future, every individual traditional bank will need to go for itself which path will lead on the greatest prosperity. Some things, however, do understand. Trying to imitate the Chinese examples of Tencent and Alibaba will be foolish. The regulatory infrastructure is defined against it. Instead, we at Bruc Bond believe that close, tight-knit cooperation between loan companies, agencies, local authorities and business can provide the right path to your bright future.
Such integration offers solutions towards the many woes felt by medium and small-sized businesses (SMEs) due the upheavals in the European banking industry, which Mr Nachum recently wrote about in the article for that 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 just be achieved by true, sustained openness. Regulators might help, by mandating information sharing, nevertheless the onus is for the actors inside the markets themselves to formulate frameworks that encourage cooperation. These might be limited schemes to begin with, that grow deeper as trust develops. Doubtless, this could require some feats of the imagination, but when some in the brightest minds engage these issues, they can, we are confident, come up with some creative solutions on the issues that vex bankers. The next banking revolutions demands it.
The movement to your more open and interconnected financial world has recently begun, with clear steps taken both 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 around the continent. It opened up the banking system to the entry of so-called non-bank finance institutions (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 with a sector being affected by downsizing pressures.
However, integration may be taken much further, says Eyal Nachum. If we consider the Chinese giants Tencent and Alibaba, we view a model banks may decide to imitate with a degree. The two companies operate Super Apps, WeChat and Alipay, respectively, tend to be more than payment services. These are so-called “lifestyle apps” , that allow users to do anything from ordering a taxi, through making interpersonal money transfers, to, in most Chinese provinces, paying utility bills and more. It’s simple to imagine the convenience that such centralisation brings.
According to Eyal Nachum, you don’t have to consolidate everything in one place, but tighter integration may be possible and desirable. If we turn to Singapore, we percieve the likes of DBS, one of the country’s leading banks, launching a unique 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 from their Asian counterparts, as an example by means in the UK’s fintech bridges, which Mr Nachum recently discussed using the Sunday Times.
Under the PSD2, European banks and financial institutions are mandated to provide application programming interfaces (API) , in which other banking institutions (like, by way of example, Bruc Bond) can access data and issue authorised instructions on customers’ behalf. Sadly, most of banks in Europe have inked only the least to conform to regulatory requirements for open banking, in lieu of explore how such initiatives can 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 using a service that will 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 quickly come to expect it, and poorly prepared banks will suffer as a result.
There are lots of paths to a open banking future, every individual traditional bank will need to go for itself which path will lead on the greatest prosperity. Some things, however, do understand. Trying to imitate the Chinese examples of Tencent and Alibaba will be foolish. The regulatory infrastructure is defined against it. Instead, we at Bruc Bond believe that close, tight-knit cooperation between loan companies, agencies, local authorities and business can provide the right path to your bright future.
Such integration offers solutions towards the many woes felt by medium and small-sized businesses (SMEs) due the upheavals in the European banking industry, which Mr Nachum recently wrote about in the article for that 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 just be achieved by true, sustained openness. Regulators might help, by mandating information sharing, nevertheless the onus is for the actors inside the markets themselves to formulate frameworks that encourage cooperation. These might be limited schemes to begin with, that grow deeper as trust develops. Doubtless, this could require some feats of the imagination, but when some in the brightest minds engage these issues, they can, we are confident, come up with some creative solutions on the issues that vex bankers. The next banking revolutions demands it.
