European Open Banking Grows Through Smart Regulation

If you want to see what open banking will look like in the United States, eventually, look to Europe where banking regulators are not as timid as their American counterparts.

Conny Dorrestijn, co-founder of BankiFi, said European regulators decided after 2008 that banks needed more competition. Or to be more precise, consumers needed more competition among banking providers.

Regulators said “We are going to open up the market and given consumers a choice to bank with you or take services that you do quite badly away form you and give it to somebody else.”

Banks that get it, like ING, are incredibly well-positioned to win in this space, she added, although she thinks that number will be about 20 percent of existing banks. The chairman of ING has said that banks must be prepared to sell products from other banks. The big tech players have some opportunities here, but she thinks their record on data breaches and poor privacy practices have undercut them.

“Three years ago people would have believed them, but with all the data breaches and data privacy issues people now trust the big tech firms even less than they trust banks. I don’t think consumers will massively migrate. The winners will be the big banks who get it; the smaller banks will suffer, and the challenger banks challenge very little apart from themselves. They don’t have  really different offerings from the large banks and they often still run on outdated technology.”

BankiFi has developed an intermediary layer it calls a consent-centric platform which manages APIs, account aggregation, data owned by an individual or a corporation, token management and AI. The goal is to reduce the complexity for a bank and for a fintech which wants to offer services to a bank’s customers while abiding by the data privacy rules of GDPR.

Read more of this Forbes article by Tom Groenfeldt by clicking here.