Open Banking

Open Banking

 

Luiz Zorzella shares a summarized evolution story on Open Banking. 

If you are thinking your response to what is happening around Open Banking, this will provide you with some valuable historical context on how events evolved to get us where we are today:

It all started with online banking.

Before Open Banking, banks thought it would be a good idea to give their clients access to their accounts using the internet. 

So, since clients could access their accounts using online banking – some start-ups realized that if these customers provided them with their bank login information, they could log in on these accounts and manage them on their behalf.

Also, at that time, legislation was evolving.

In most of the World, there is customer data that banks cannot share, even if authorized by the customer.  For example, credit data.

However, in recent years, if, on the one hand, you see a tightening in data privacy protection, on the other hand, you also see the relaxation and regulation of financial data sharing.

These two factors – the spreading and deepening of online banking and the regulation of financial data sharing, beget a whole generation of fintechs. 

These start-ups had algorithms that logged in your account, copied the information displayed on the screen, interpreted that information and used this data to populate their database to provide you with their services.

 

Key points include:

  • The fallibility of algorithms
  • Accessing client data and functionality
  • Three types of APIs

 

Read the full article, Trailing the Peculiar Origin and History of Open Banking, on Amquant.com.

 

 

Luiz Zorzella shares an article on the growth of open banking, the factors that “repress” adoption, and possible solutions. 

As you probably know, worldwide, Open Banking is one of the hottest trends in financial services. 

Not only is it growing at a breakneck speed, but also its success is inspiring regulators and players in other sectors like finance and insurance who now wonder how to replicate the model.

This article is a high-level review of what is happening in Open Banking today.

Growth

As I said, Open Banking is growing.  To understand how fast it grows, consider that the UK (the pioneer in adopting it) formally started this journey less than three years ago, followed by Hong Kong, the EU, South Korea and Singapore. In the US, the Consumer Financial Protection Bureau joined the race in 2019.  Twenty other countries followed suit, including Canada, Australia, India, Japan, Israel and India.

As a result, high growth rates in each market are being compounded by the entry of new markets.

For example, in Europe, when a market opens, it has explosive growth, which tends to stabilize in the single digits range (per month) once it reaches ~8 API calls per inhabitants per month.  But, as the UK “stabilizes”, new entrants like Italy, Germany and France push the averages up.

 

Key points include:

  • Debottlenecking
  • Screen scraping solutions by Fintechs
  • Emerging intermediaries

 

Read the full article, Open Banking Market Unleashed, on Amquant.com.