Attack is the best form of defense, so says the age-old adage. As cliché as this sound, banks, insurers, brokerage and advisory firms – traditionally known as the financial services industry (FSI) – must do this or risk being left out of the new banking value chain. Why?
Simply put, the days in which the FSI exclusively owns and processes customers’ data is waning. It is giving way to the age of Open Banking – a new era where the FSI must avail customer data to non-bank, third party financial providers (TPPs), also known as financial technology (FinTech) providers.
While it isn’t curtain call for the FSI yet, this paper argues that it must act now to embrace Open Banking. How? By forging strategic partnerships with reputable FinTech firms via the use of open application programming interfaces (APIs). Open APIs will make it possible to securely leverage new innovations from FinTech firms and yet allow banks to keep their prized possession – that of the relationship with their customers.
By reading this white paper you will learn:
- How advanced markets in the UK and Europe are leading the way with the introduction of the Revised Payment Services Directive (PSD2) legislation to spur banks to share information with TPPs. While there isn’t similar legislation yet in Asia Pacific, the trend is unstoppable as market forces will ensure that Open Banking will fully blossom in Asia in the next 18 to 24 months.
- While Open Banking may be perceived as nascent and fragmented in APAC, especially Southeast Asia (ASEAN), the pace at which it is being explored by the FSI in both regions is advancing very quickly. Banks, in particular, must act by embracing open API frameworks to prepare for this wave or risk being disintermediated.
- Collaboration with FinTech firms is the order of the day. Reputable FinTech firms have the creativity, agility, technical expertise, community-driven pulse of today’s young and savvy consumers, and can provide new, tech-based solutions to put the customers at the center of banking. The FSI has the resources, broad customer base, and regulatory expertise to advance Open Banking. Together more can be achieved.