NEWS


IBS Journal December 2017


11


Open banking mindset driven by regulation, technology and culture


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here are a number of factors driving the open banking “revolution”, and both consumers and banks need to be ready and willing to embrace it.


This was the conclusion reached by a panel at financial services firm Finastra’s event in London - Finastra Universe


Hugh Cumming, CTO at the firm, led a panel which included regulators, banks and a fintech. The key question asked was whether open banking was a serious matter or whether it was still just a buzzword.


“For us it’s a huge opportunity,” answered Steve Everett, managing director of product and propositions for global transaction banking at Lloyds.


“We already bank for 30% of the UK population in retail space and 20% in commercial space. [In the future,] working with partners will be hugely rewarding for clients and shareholders. If we can embrace APIs and take more data, [we will achieve] far greater insight and ability to spot trends – the opportunity is immense.”


Daniel Szmukler, director at EBA, added: “It’s the shift from the “silo” mindset for us that is most important. People are communicating much more openly with each other. It’s a cultural change and not one that is only technologically driven.”


“This started out as regulation,” countered Everett. “I wouldn’t like to imagine what the five big UK clearing banks have spent on regulation. You have to embrace it. If you look back at Faster Payments and SEPA – the banks have been forced to make these changes and have come up with better products and solutions.”


“Of course, if banks would have had a choice, they wouldn’t have made any of the projects they’ve implemented in the past 20 years,” said Szmukler.


“That’s not so much because as banks we don’t want this to happen – we just don’t see ourselves as capable of finding the right compromise.”


Google, Amazon, Facebook and Apple have it easy, he added. They only need to place a sender and receiver in the same ecosystem. Banks have different agreements and accords and every partner has their own interests.


A poll given to the audience on whether they were ready for open banking or not revealed some eye-opening results. Just over half of those watching said that they were either not ready for open banking or didn’t see a realistic business case for it yet.


The result led Jamie Cambell, head of awareness at Bud, to proclaim “see me after class”. Will the banks have learned by next year, though?


LMAX Exchange partners with Oxford to improve FX transparency


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MAX Exchange has teamed up with a researcher and published financial expert in Oxford University’s Mathematical Institute, Dr. Álvaro Cartea.


Dr. Cartea specialises in high-frequency and algorithmic trading, as well as market quality and financial regulation. Together, LMAX Exchange and Dr. Cartea aim to drive forward the industry’s understanding of FX TCA and produce mathematically robust findings of practical value to benefit all FX market participants..


The work will be “unbiased, a reflective and fair assessment” and will promote “further FX engagement” in the industry. Dr. Cartea will be conducting independent research, but will also contact industry participants and other academics.


“There has been very little published research to date in FX and particularly in the fields of Market Structure and Transaction Cost Analysis when compared to more regulated asset classes,” says Dr. Andrew Phillips, CTO at LMAX Exchange.


“We were delighted to be approached by Dr. Cartea in response to our TCA whitepaper. The mathematical rigour and analysis that Dr. Cartea and his group will bring to the topic presents a unique opportunity for us to support and accelerate the pace of industry understanding of FX TCA.”


Dr. Cartea added: “Blending advanced mathematical modelling with industry knowledge and data is the most effective way to deliver research with impact.”


www.ibsintelligence.com


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