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IBS Journal July 2018


43


TrueLayer CEO Francesco Simoneschi (right) with co-founder Luca Martinetti


loans, insurance, loyalty cards and current accounts. Printing out bank statements to prove your identity or earnings will soon seem quaint and arcane as companies can simply confirm these details with the click of a button.


Undoubtedly, by creating new opportunities for direct bank payments, competition and consumer choice will increase, especially in the credit card market. Credit in general will be disrupted as credit bureaus and banks face stiff competition. The result should be a substantial increase in the availability of finance, especially for those who have been traditionally locked out of financial markets.


Artificial intelligence will also be used to analyse cashflow or create a new range of financial assistant bots or data insights for SMEs. We may soon see AI driving financial recommendation engines generating personalised loan, investment and insurance products for consumers. By linking with tools such as Google Calendar, Amazon Echo or Facebook Messenger, banks will be able to better serve their customers by sending notifications to remind users of payments or charges.


Innovation will take place on the granular and macro level. Organisations could develop radical solutions to specific problems; for example, charitable organisations could create applications that monitor the financial health of at-risk individuals and then set up mechanisms to intervene before serious problems occur. On a grand scale, the collection and analysis of financial data could be used to better predict trends for specific industries and the entire economy.


Of course, as with any revolution, Open Banking will not be without incident. Currently, there is some scepticism about the security and utility of Open Banking – especially among consumers. The vast


majority of this concern is misplaced and largely fuelled by media coverage that does not fully get to grip with the purpose of Open Banking or the safeguards that have been created. As more solutions with clear benefits get created and launched, adoption will rapidly increase and apprehension will dissipate. It’s worth noting that Open Banking and PSD2 creates a security framework that, if applied to other data-heavy tech sectors such as social media, would make hacks and breaches an exceedingly rare occurrence.


With more and more people taking advantage of Open Banking, the fintech and banking industry will change. Funding and talent will flow at an even greater pace into the industry and we’re likely to see large tech companies take a more active role, for example by seeking to consolidate a range of start-ups into one solution.


For banks, the outlook is more complex. On one hand, the growth of challenger banks and bespoke solutions is likely to spur competition and innovation – lowering the price of some services and increasing the acquisition or in-house development of new technology. On the other hand, it could completely change the role of banks in the financial sector. It is not inconceivable that financial institutions could simply become the pipes through which financial data flows. Perhaps they will become hubs for innovation – platforms on which start-ups are encouraged to build solutions.


Exactly how Open Banking will unfold is very difficult to predict, but what is clear is that an environment has been created to radically alter the financial industry. It is not hyperbole to say that this change will be just as far-reaching as anything that has impacted the retail or travel industry. For everyone involved in financial services, there is a clear incentive to understand and embrace Open Banking. The alternative is to be left behind.


www.ibsintelligence.com


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