Eyal Nachum of Bruc Bond to Banks: Embrace Openness

Eyal Nachum, Bruc Bond ’s fintech guru and board member, has a message to banks: it’s time for it to embrace open banking as well as the cooperation it can bring. The advantages of cooperating with alternative providers far outweigh the risks of loosening control, he states.
The movement to your more open and interconnected financial world has already begun, with clear steps taken in the the European Union and in Asian markets towards this goal. Europe’s Payment Services Directive (now in their second iteration, the PSD2) served because the kickoff shot for the continent. It opened up the banking system on the entry of so-called non-bank banking institutions (NBFI) , who have taken on large chunks in the labour previously done by banks. Rather than hurting banks, NBFIs have reduced banks’ workload while introducing additional revenue streams, providing a much-needed buoyancy float to your sector struggling with downsizing pressures.
However, integration could be taken much further, says Eyal Nachum. If we glance at the Chinese giants Tencent and Alibaba, we percieve a model banks may wish to imitate to your degree. The two companies operate Super Apps, WeChat and Alipay, respectively, less complicated more than payment services. These are so-called “lifestyle apps” , which permit users to do anything from ordering a taxi, through making interpersonal money transfers, to, in some Chinese provinces, paying power bills and more. It’s simple to imagine the convenience that such centralisation brings.
According to Eyal Nachum, you shouldn’t have to consolidate everything in one location, but tighter integration can be done and desirable. If we look for Singapore, we view the likes of DBS, one with the country’s leading banks, launching its own car marketplace in partnership with sgCarMart and Carro UOB, another leading Singaporean bank, recently launched its own travel marketplace. These imaginative pursuits is usually a lighthouse to European banks, who should employ whatever way you can to learn from other Asian counterparts, as an example by means of the UK’s fintech bridges, which Mr Nachum recently discussed with all the Sunday Times.
Under the PSD2, European banks and banking institutions are mandated to offer application programming interfaces (API) , where other finance institutions (like, by way of example, Bruc Bond) can access data and issue authorised instructions on customers’ behalf. Sadly, a lot of banks in Europe have done only the least to conform to regulatory requirements for open banking, rather than explore how such initiatives may be incorporated into banks’ strategic plans. This is a short-sighted mistake, says Eyal Nachum.
Banks are losing an opportunity to offer their clients and customers having a service that can actually get people excited about banking. This is to their detriment and endangers their long-term prospects. To be competitive in 2020 and beyond, banks must accept the platformification of monetary services. Users will quickly come to expect it, and poorly prepared banks will be affected as a result.
There are numerous paths to an open banking future, each individual standard bank will need to decide upon itself which path will lead for the greatest prosperity. Some things, however, are evident. Trying to imitate the Chinese types of Tencent and Alibaba would be foolish. The regulatory infrastructure is defined against it. Instead, we at Bruc Bond believe close, tight-knit cooperation between finance institutions, providers, local authorities and business can offer the right path to a bright future.
Such integration gives solutions for the many woes felt by medium and small-sized businesses (SMEs) due the upheavals inside the European banking industry, which Mr Nachum recently wrote about in a article to the Global Banking & Finance Review.
To reach utopia, however, we must build trust. Trust, we mean, between customers and institutions, and between institutions themselves. This can just be achieved by true, sustained openness. Regulators might help, by mandating information sharing, though the onus is about the actors in the markets themselves to formulate frameworks that encourage cooperation. These might be limited schemes to start with, that grow deeper as trust develops. Doubtless, this might require some feats of the imagination, when some from the brightest minds build relationships with these issues, they could, were confident, develop some creative solutions towards the issues that vex bankers. The next banking revolutions demands it.