Last updated: 21 June 2019
Money 2020, which took place in Amsterdam at the start of the month, covered a host of topics on the mind of European fintech executives – from AI’s impact on the financial services sector to the changing payment value chain.
One subject took center stage at this year’s event; Open Banking. Over a year since the directive came into play – and three months until the European PSD2 mandatory deadline arrives – Money 2020 gave the industry a chance to take stock and reflect on the impact Open Banking has had since it was introduced.
It’s also fitting that after 12 months defined by the public slip-ups of Silicon Valley tech giants that the event would choose to focus on Open Banking. After all, the essence of Open Banking is about transparency and fairness, so the topic felt like a suitable palate cleanser and a chance to move the conversation on.
Broadly, the mood music around Open Banking was of cautious optimism, but with the caveat that more can be done to make PSD2 truly effective. On the one hand, speakers praised its democratizing ethos by allowing new players access to consumers’ financial data, but on the other voiced concerns about the speed of its rollout in different countries, security issues and the lack of fundamental consumer awareness of Open Banking and its implications for them.
Certain themes came up time and again, including a few key areas raised by industry speakers and panel guests:
- The Open Banking rollout is piecemeal
One of the key recurring criticisms of Open Banking was the inconsistency of its rollout, with different regions showing varying degrees of deployment. While the UK was praised for being a frontrunner its implementation of Open Banking, other European countries didn’t receive the same plaudits. Several speakers also noted that some banks and incumbent financial providers were dragging their feet in handing over data to customers, hiding behind their compliance and risk scenarios, and not doing enough to make consumers aware of the benefits of PSD2.
- Other sectors need to follow financial services’ lead
A range of speakers did underline how the principles of Open Banking should be applied to other industries such as telecoms and insurance. Frank Jan Risseeuw of Yolt called Open Banking the ‘Spotify of the financial world’, emphasizing its ability to essentially hand customers back their financial details. A number of speakers highlighted that other industries with entrenched incumbents could learn from the democratizing ethos behind the directive in order to hand more powers to the consumer.
- Digital identities are key for engendering trust
Security was a recurring theme across the event with speakers worrying that Open Banking left consumer financial details open to exploitation as APIs carried their financial information outside of the safe confines of bank’s ecosystems. Douwe Lycklama at Innopay sought to quell these fears by suggesting that digital identities were a crucial element in creating a “unified trust model”. This would then help service providers to build trust with customers by preventing fraud, encouraging them to give consent to their data being used.
- The man on the street is largely unaware of Open Banking
Another theme that popped up again and again was the amount of navel-gazing and back-slapping from the industry around the implementation of Open Banking, but the man on the street was still mostly in the dark about the implications of it for them. Daniel Kjellén, co-founder of Tink, made the point that from September, the industry will be operating in a fully regulated environment. Once this has happened, and Open Banking initiatives are being adapted by the population, “Europe will be set alight”.
The event also took the opportunity to look beyond Open Banking, towards a completely Open Data Economy. PSD2 and Open Banking, it was suggested, would in the future be regarded as a footnote of an even more egalitarian system where owning your own financial data was a human right. This would be a truly democratic data-driven society where data would become a transactional currency.
What the series of panels and discussions at Money 2020 did make clear was the fact that to achieve this ideal, a lot more was needed to be done to reassure consumers that their data was in safe hands. Consistent, versatile and, above all, secure digital identities would help to achieve the degree of trust needed to make the Open Banking revolution a genuine success. This year’s Money 2020 served to underline that while the industry is on the way to reaching this ideal, it still has a long way to go.