Secrets Of Bruc Bond – The Inside Track

Eyal Nachum, Bruc Bond ’s fintech guru and board member, carries a message to banks: it’s time and energy to embrace open banking and also the cooperation it may bring. The advantages of working together with alternative providers far outweigh the potential risks of loosening control, according to him.
The movement to some more open and interconnected financial world has recently begun, with clear steps taken at the European Union as well as in Asian markets towards this goal. Europe’s Payment Services Directive (now rolling around in its second iteration, the PSD2) served because kickoff shot around the continent. It opened up the banking system on the entry of so-called non-bank finance institutions (NBFI), that have taken on large chunks from 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 possibly be taken much further, says Eyal Nachum. If we glance at the Chinese giants Tencent and Alibaba, we see a model banks may wish to imitate to some degree. The two companies operate Super Apps, WeChat and Alipay, respectively, tend to be more than payment services. These are so-called “lifestyle apps”, which allow users to complete anything from ordering a taxi, through making interpersonal money transfers, to, in some Chinese provinces, paying electric bills and more. It’s easy to imagine the convenience that such centralisation brings.
According to Eyal Nachum, there is no need to consolidate everything in one location, but tighter integration may be possible and desirable. If we look to Singapore, we have seen 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 very own travel marketplace. These imaginative pursuits is usually a lighthouse to European banks, who should employ whatever way possible to learn from their Asian counterparts, by way of example by means from the UK’s fintech bridges, which Mr Nachum recently discussed while using Sunday Times.
Under the PSD2, European banks and loan companies are mandated to deliver application programming interfaces (API), through which other finance institutions (like, for example, Bruc Bond) can access data and issue authorised instructions on customers’ behalf. Sadly, most banks in Europe did only the smallest amount to adhere to regulatory requirements for open banking, instead of explore how such initiatives could be incorporated into banks’ strategic plans. This is a short-sighted mistake, says Eyal Nachum.
Banks are losing an opportunity to deliver their clients and customers which has a service that could actually get people enthusiastic 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 financial services. Users has decided to come to expect it, and poorly prepared banks will suffer as a result.
There a wide range of paths for an open banking future, and each individual financial institution will need to decide for itself which path will lead on 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 loan companies, agencies, local authorities and business can offer the right path with a bright future.
Such integration offers solutions on the many woes felt by medium and small-sized businesses (SMEs) due the upheavals in the European banking industry, which Mr Nachum recently wrote about in the article for 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 can help, by mandating information sharing, nevertheless the onus is on the actors inside markets themselves to produce frameworks that encourage cooperation. These might be limited schemes to start with, that grow deeper as trust develops. Doubtless, this could require some feats with the imagination, however, if some in the brightest minds engage with these issues, they might, we are confident, develop some creative solutions on the issues that vex bankers. The next banking revolutions demands it.