IBS Journal July 2018
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“Not a lot has happened [since PSD2],” said Boden. “I don’t think that Open Banking alone will transform the industry.” Firms need to start looking at their own value chains, she added, and investigating the possibility of opening them up to consumers.
JP Rangaswami, CDO at Deutsche Bank, opined that Open Banking should mean two things: being open to competition, and being open to innovation. Yet things need to be done in a way which protects customer data, he added.
Implementation of Open Banking must be done “safely and securely”, even if there is a mandate from the industry, said Rangaswami. Simple customer service demands it.
Valentin Stalf, N26 founder and CEO, said that consumers are “the ultimate deciders” and that the more transparent the market, the better it is overall for the customer. Stalf was of the opinion that there can definitely be something as “too much regulation”. Compliance laws will not solve customer problems, he added–- only companies can do that.
When it comes down to it, concluded Boden, the industry is facing “an API revolution, not an Open Banking revolution”. Connectivity between value-added services and banks should always be the end goal, and will result in improved customer satisfaction.
Best of enemies?
Despite the anti-bank feeling, there were some lessons taught by TransferWise co-founder and CEO Kristo Käärmann, who revealed how the combative fintech firm might just have a secret soft spot for major banks.
TransferWise recently inked a deal with France’s second-largest banking group, BCPE, which will see the group implement TransferWise into its mobile banking app from 2019 onwards. It was a huge statement of intent from the French group, considering that TransferWise made its name undercutting banks on fees.
It’s not the first time that a bank has utilised the fintech firm, though. Käärmann said that Hungary’s Axis Bank had been responsible to an anomalous increase in Hungarian users of TransferWise. The bank had worked out that forex was too expensive for it, so directed consumers elsewhere.
“Banks are so multi-product, it’s not easy for them to figure out the cost of their international transfers,” said Käärmann. Since much of the data can be siloed away in branches it’s easy to miss. Once a bank realises the costs, he added, they quickly identify services that are actually very expensive to run – services that could be better shipped off to strategic fintech partners.
Banks used to be dismissive towards their lesser cousins, said Käärmann, yet now they’re realising that not all fintechs are here to displace them and are more than happy to collaborate. TransferWise handles more than $3 billion in payments, but has yet to even “scratch
The second day of the show saw a stat attack launched by Kennth Lin, CEO and founder of Credit Karma. Despite being founded in 2007 – “what a time to found a financial services company, right?” – the firm has gone on to gather 80 million customers, while fully half of all millennials in the US have used the platform.
Lin churned out the percentages to demonstrate how the world of finance is changing around us – even in a country so reliant on old methods like the US. Some 33% of people the company surveyed had used some form of fintech product, yet despite all the innovation, Lin argued that consumer benefit is actually limited. About 46% of consumers, he said, feel overwhelmed by their finances, while 29% of millennials feel ashamed of them. Perhaps most damningly, 62% of people think that banks are only there to help the wealthiest in society. Combined with the fact that 46% of US consumers have less than $500 in their savings accounts, the figures paint a bleak picture.
Yet, with a proliferation of fintech solutions dotting the show floor, there were plenty of companies willing to put themselves forward as solvers of that particular problem. Among the t-shirt wearers and ripped jeans crowd, IBSJ bumped into Temenos exhibiting its new “digital to the core strategy”. The company is making a big push in Ireland following its deal with Bank of Ireland.
Ireland is making a big push towards becoming a centre of European financial technology. It’s no longer, in Taoiseach Leo Varadkar’s words, “a small, insular island on the edge of Europe”, and perhaps with a few more shows like this, the country will muscle its way onto the European technological stage.
the surface” when compared with major banks, added Käärmann, in a surprisingly humble admission. Just like in Hollywood movies, the grizzled cop of banking and the fintech recruit will learn they’re better off working together than butting heads.
Run the numbers
www.ibsintelligence.com
Stephen McCarthy/MoneyConf via Sportsfile
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