The comments came at the Open Banking Expo Magazine Breakfast Briefing in London on 3 July. Speakers from across the sector discussed how to harness the opportunities presented by the PSD2 directive and what companies need to do to ensure success.
Hosted in collaboration with Equinix, the event featured a panel discussion with Nilixa Devlukia, Head of Regulatory at the Open Banking Implementation Entity, Paul Clark, Chief Technology Officer at Tandem Bank, and Andrew Kemp, Open Banking Lead at HSBC, as well as talks from Eleni Coldrey, Business Development Director at Equinix, and Ireti Samuel-Ogbu, Head of Payments and Receivables for EMEA at Citi.
The main issues discussed throughout the morning centred on how Open Banking can deliver true innovation for consumers, how banks can use their customer data to produce useful APIs for the industry, and how banks can work with third parties to build ecosystems that benefit all participants in the market.
“The real innovation will come when we allow people to interact with their money, when they can get the right product for them in the right way,” Mr Clark said, adding that so far Open Banking has resulted in a better user experience and the next step is to bring better products to market.
To achieve this, the panellists agreed that companies will need to find a way to quantify whether they are genuinely innovating.
“It isn’t just market share and origination, we’re focusing on the customer journey and we’re measuring it in terms of customer pain points and reducing friction,” Mr Kemp at HSBC said.
Meanwhile, Ms Devlukia at the Open Banking Implementation Entity said there will need to be several different ways of determining whether Open Banking technology has resulted in true innovations.
“Some of it is surely the basics of measuring how many people in five years are providing access to their data,” she said. “But how are you going to quantify the services that wouldn’t be possible without this access or the regulatory framework? I’m not sure improved user experience is any measure of innovation – it’s got to happen.”
During her presentation, Ms Coldrey at Equinix said Open banking technology is about creating a digital strategy that delivers a solution to customers and requires a specialist team to make it a success. This involves multiple players in a broader ecosystem that will need to cluster together as a hub to make Open Banking a success, although this may take some time.
“The number of connections that banks and fintechs are making will test the infrastructure at every level, and we will see some growing pains there,” she said.
For Ms Samuel-Ogbu at Citi, the answer for the banking sector is to collaborate rather than attempt to innovate alone.
“An aspect of innovation is, how do we co-create? You can’t innovate in a vacuum and banks historically have taken a Field of Dreams ‘build it and they will come’ approach,” she said. “We’ve had to become more client-centric and to build to meet client needs.”
She added: “Our bold strategy is to become the ecosystem for global commerce. But how do you become the ecosystem when you’re a standalone company? That requires some collaboration. We need to think beyond Citi.”