Eyal Nachum of Bruc Bond to Banks: Embrace Openness

Eyal Nachum , Bruc Bond’s fintech guru and board member, features a message to banks: it’s time for you to embrace open banking and the cooperation it may bring. The advantages of working with alternative providers far outweigh the potential risks of loosening control, he says.
The movement to your more open and interconnected financial world has begun, with clear steps taken in the the European Union as well as 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 the banking system to the entry of so-called non-bank financial institutions (NBFI) , who’ve taken on large chunks from the labour previously made by banks. Rather than hurting banks, NBFIs have reduced banks’ workload while introducing additional revenue streams, providing a much-needed buoyancy float to some sector being affected by downsizing pressures.
However, integration could possibly be taken much further, says Eyal Nachum. If we consider the Chinese giants Tencent and Alibaba, we percieve a model banks might wish to imitate with a degree. The two companies operate Super Apps, WeChat and Alipay, respectively, less difficult more than payment services. These are so-called “lifestyle apps”, which permit users to perform anything from ordering a taxi cab, through making interpersonal money transfers, to, in most Chinese provinces, paying bills and more. It’s an easy task to imagine the convenience that such centralisation brings.
According to EYAL NACHUM, you shouldn’t have to consolidate everything in one place, but tighter integration is achievable and desirable. If we look for Singapore, we have seen the likes of DBS, one of the country’s leading banks, launching its very own car marketplace in partnership with sgCarMart and Carro. UOB, another leading Singaporean bank, recently launched its own travel marketplace. These imaginative pursuits could be a lighthouse to European banks, who should employ whatever possible way to learn off their Asian counterparts, as an example by means in the UK’s fintech bridges, which MR NACHUM recently discussed with all the Sunday Times.
Under the PSD2, European banks and loan companies are mandated to provide application programming interfaces (API), in which other financial institutions (like, by way of example, BRUC BOND) can access data and issue authorised instructions on customers’ behalf. Sadly, a majority of banks in Europe have done only the smallest amount to conform to regulatory requirements for open banking, as opposed to explore how such initiatives could be incorporated into banks’ strategic plans. This is a short-sighted mistake, says Eyal Nachum.
Banks are missing an opportunity to provide their clients and customers using a service that will actually get people pumped up about banking. This is for their detriment and endangers their long-term prospects. To be competitive in 2020 and beyond, banks must accept the platformification of economic services. Users will soon come to expect it, and poorly prepared banks are affected as a result.
There a wide range of paths to an open banking future, every individual financial institution will need to decide for itself which path will lead to the greatest prosperity. Some things, however, are evident. Trying to imitate the Chinese examples 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, companies, local authorities and business offers the right path to some bright future.
Such integration would provide solutions for the many woes experienced medium and small-sized businesses (SMEs) due the upheavals inside European banking industry, which Mr Nachum recently wrote about in the article to the Global Banking & Finance Review.
To reach utopia, however, we have to build trust. Trust, we mean, between customers and institutions, and between institutions themselves. This can just be achieved by true, sustained openness. Regulators will help, by mandating information sharing, however the onus is about the actors inside the markets themselves to produce frameworks that encourage cooperation. These could be limited schemes firstly, that grow deeper as trust develops. Doubtless, this might require some feats with the imagination, however, if some with the brightest minds build relationships with these issues, they could, were confident, develop some creative solutions to the issues that vex bankers. The next banking revolutions demands it.