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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 to embrace open banking and also the cooperation it could bring. The advantages of using the services of 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 both in the European Union along with Asian markets towards this goal. Europe’s Payment Services Directive (now in its second iteration, the PSD2) served because the kickoff shot around the continent. It showed the banking system towards the entry of so-called non-bank finance institutions (NBFI) , who may have 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 might be taken much further, says Eyal Nachum. If we glance at the Chinese giants Tencent and Alibaba, we view a model banks might wish to imitate to your 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 permit users to do anything from ordering taxis, through making interpersonal money transfers, to, in some Chinese provinces, paying electric bills and more. It’s all to easy to imagine the convenience that such centralisation brings.
According to Eyal Nachum, you don’t have to consolidate everything in one place, but tighter integration can be done and desirable. If we look for Singapore, we percieve the likes of DBS, one from 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 can be a lighthouse to European banks, who should employ whatever way possible to learn using their Asian counterparts, as an example by means with the UK’s fintech bridges, which Mr Nachum recently discussed with the Sunday Times.
Under the PSD2, European banks and banking institutions are mandated to deliver application programming interfaces (API), through which other loan companies (like, for example, Bruc Bond ) can access data and issue authorised instructions on customers’ behalf. Sadly, most of banks in Europe have inked only the smallest amount to conform to regulatory requirements for open banking, rather than explore how such initiatives can be incorporated into banks’ strategic plans. This is a short-sighted mistake, says Eyal Nachum.
Banks are passing up on an opportunity to supply their clients and customers using a service that will actually get people pumped up about banking. This is on 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 quickly come to expect it, and poorly prepared banks will be affected as a result.
There are numerous paths with an open banking future, each individual traditional bank will need to decide for itself which path will lead to the greatest prosperity. Some things, however, are evident. Trying to imitate the Chinese samples of Tencent and Alibaba will be foolish. The regulatory infrastructure is placed against it. Instead, we at Bruc Bond feel that close, tight-knit cooperation between finance institutions, service providers, local authorities and business provides 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 within the European banking industry, which MR NACHUM recently wrote about in a 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 only be achieved by true, sustained openness. Regulators may help, by mandating information sharing, but the onus is for the actors inside markets themselves to build up frameworks that encourage cooperation. These might be limited schemes to start with, that grow deeper as trust develops. Doubtless, this would require some feats with the imagination, however when some of the brightest minds build relationships these issues, they are able to, we are confident, come up with some creative solutions towards the issues that vex bankers. The next banking revolutions demands it.