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Open Banking – What role for banks?

Views of Fabric Denele, Senior VP, Natixis

Regulation: At the very beginning of PSD2, there are a lot of third parties that were not regulated. We lobbied against that. We also lobbied for stronger security, eg not allowing screen scrapping.

Apps: Banks are making huge investments in API and open banking. The new generation of banking apps is not very different from what new banks offering.

USP of Banks: Banks have always had data but rarely exploited it. We have millions of customers and this also creates constraints. We cannot go as new fintechs. When we launch a new product or service, it has to be reliable and it has to scalable and it has to work every day. The hidden assets of a bank and reliability and robustness of the banking system as a whole. A start-up does not have background of expertise and security. So, one role of banks is to bring the culture of robustness and reliability.

Partnership: Banking is not easy. It is about hazy regulation. Fintechs prefer to partner with banks rather than build banks. Banks are experts in compliance. In the old world, each bank owned the entire solution. Now banks are going for partnership model…..and also they are exploring what they are good at. These partnerships create new models and new wealth.

Cost Competition: The world of plastic cards will have to evolve to the new ways of the digital world. 15 years ago, competition and regulation made merchant acquiring business less profitable. So third parties came in and since they were less regulated, they could raise prices. Same could happen on the issuing side.

Forecast: Lots of consolidation will take place in payments space, less in banking space.

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