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Open Banking – is customer benefit considered?

Openbanking

Part 2:

Second of what I hope is a series of deeper dives on Open Banking.

This quote from Macroglobal does a good job at summing up the general view of consumer benefit. It is largely opinion (imho).

Banks who do not embrace open banking, in our opinion, will not only limit their ability to connect with clients in meaningful ways but will also limit their opportunity to remain at the forefront of innovation. Instead of being caught off guard by UK legislation or losing a competitive position in an emerging market, banks should begin planning their strategy and investing in the infrastructure required to fully exploit open banking.

Open Banking post COVID-19: Accelerating Innovation in Banks

The challenge lies in defining the real customer benefit which in turn is more likely to result in behavioural change. Again the origins of the direction came from Britain and post 2008 Banking Crisis. Britain smartly moved to “ring fence” consumer deposits with a view to restricting Investment Banking devisions from introducing systemic risk through investing consumer funds in risky endeavours. (Think Ponzi or Bankman-Fried)

I recall while I was at a top 5 Canadian Bank and I was challenging for Yodlee as an offer. I was shot down because surveys of Canadians indicated they wanted their banking split across FI’s so they could self manage risk of Bank default. That was in the early 2000’s.

  • so first question is whether consumers believe the risk is sufficiently mitigated that they will trust their information (not their money) to one FI and can live with a default.
  • second, what are the differences between countries

A recent Economist report (Banking in 2035: three possible futures) which was published in LinkedIn, highlighted mega trends:

  1. Digital evolution
  2. Economic fragmentation
  3. Shared global challenges
  4. Social inequities
  5. Ethics becoming a required pillar of Corporate Mission

I have no issue with the trends other than the consumer is not represented and they do not always follow trends naturally. Often it lies with Government Policy shifts through Industrial, Fiscal or Regulatory change.

Relevance to Bankwatch:

I remain sceptical that Consumer behaviour is adequately considered within the Open Banking framework.