IBS Journal November 2016
47
“ESTABLISHED BANKS SHOULDN’T SEE OPEN STANDARDS AS SOMETHING JUST FOR YOUNG UPSTART COMPANIES”
of a crossroads: we could have gone down the path of implementing more proprietary technology and build-it- yourself, but thankfully I think there has been a realisation amongst technical architects and those at the very top of organisations, who are ultimately signing off on projects, that there is a different way to do things. The move towards Open Banking sits really neatly with the idea of collaboration and co-creation. It isn’t an impossible dream – we’re not chasing alchemy or putting a man on Mars – this is something that the banks can do with relative ease and there’s a wide benefit to customers, regulators and investors.
Regulation, too, has become a more active player. It’s not just a one-way street, the lobbying for this change is coming from multiple directions and I don’t think we’re all wrong – we’ve all come to the same conclusion and there needs to be discussion with some purpose in mind.
IBS Journal: Is this change being driven by the new players in the market, too, due to their clean-slate
approach to banking?
HT: Of course it’s driven by them in part, because the existing banks have to find an answer to cope with them, so the first reaction is to build layers on top of existing core banking systems. We receive a lot of questions from our 70 members and from thousands of non-members and the established banks are often looking for an answer but it’s not that easy to implement changes. To prove that they are successful, larger FIs are having to create portals, mobile and internet banking solutions. What we can do is help to recreate the underlying infrastructure, enabling them to level the playing field with the challengers.
AK: What we saw a few years ago was a lot like a boxing match: in the red corner we had challenger banks and in the blue corner the established institutions. Back then it wasn’t much of a contest as you’d have a superheavyweight bank going up against a featherweight challenger, a new, younger and more agile opponent. We don’t have that sort of head-to-head right now. Some of these challengers have come in and made existing banks sit up and take notice. If you’re an established bank and you’re not of a mindset that Open Banking standards are important to you, you’ll find it very difficult to work with a challenger that you might want to acquire or partner with. Established banks shouldn’t see open standards as something just for young upstart companies.
HT: I know that two of our banking members from different regions in the world started their own challenger banks in a test environment and wanted to take all the best practices from that and migrate them back to their regular bank. Starting a separate organisation is an interesting way of doing things, especially when using BIAN to test out how these standards can be used to improve the standard bank. Banks could use this model as an example, doing so through acquisition, or through building up of their own solutions.
AK: With all the things that go alongside banking like including payments, mobile, challengers, digitisation etc. it can be easy to step back and think “oh, Open Banking isn’t that important” but to me adoption of open standards is one of the most important initiatives for the industry, one that will continue for decades and will drive banking and its customers into the future. Just how the 70s and 80s were exemplified by the rise of the big core systems, we’ve got
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