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 for you to embrace open banking and the cooperation it might bring. The advantages of working with alternative providers far outweigh the potential for loss of loosening control, according to him.
The movement to some more open and interconnected financial world has already begun, with clear steps taken in the European Union and in Asian markets towards this goal. Europe’s Payment Services Directive (now in the second iteration, the PSD2) served as the kickoff shot for the continent. It showed the banking system towards the entry of so-called non-bank banking institutions (NBFI) , that have taken on large chunks in the labour previously created by banks. Rather than hurting banks, NBFIs have reduced banks’ workload while introducing additional revenue streams, providing a much-needed buoyancy float with a sector fighting downsizing pressures.
However, integration could be taken much further, says Eyal Nachum. If we look at the Chinese giants Tencent and Alibaba, we view a model banks may want to imitate to your degree. The two companies operate Super Apps, WeChat and Alipay, respectively, less difficult more than payment services. These are so-called “lifestyle apps”, which allow users to do anything from ordering taxis, through making interpersonal money transfers, to, in a few Chinese provinces, paying power bills and more. It’s all to easy to imagine the convenience that such centralisation brings.
According to Eyal Nachum, there’s no need to consolidate everything in one location, but tighter integration is possible and desirable. If we turn to Singapore, we have seen the likes of DBS, one from the country’s leading banks, launching a unique car marketplace in partnership with sgCarMart and Carro. UOB, another leading Singaporean bank, recently launched its own travel marketplace. These imaginative pursuits can be quite a lighthouse to European banks, who should employ whatever way possible to learn off their Asian counterparts, as an example by means from the UK’s fintech bridges, which Mr Nachum recently discussed using the Sunday Times.
Under the PSD2, European banks and finance institutions are mandated to provide application programming interfaces (API), where other financial institutions (like, by way of example, Bruc Bond ) can access data and issue authorised instructions on customers’ behalf. Sadly, a majority of banks in Europe have inked only the least to conform to regulatory requirements for open banking, instead of explore how such initiatives may be incorporated into banks’ strategic plans. This is a short-sighted mistake, says Eyal Nachum.
Banks are missing an opportunity to offer their clients and customers which has a service that can actually get people enthusiastic about banking. This is to their detriment and endangers their long-term prospects. To be competitive in 2020 and beyond, banks must accept the platformification of monetary services. Users will soon 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 every individual standard bank will need to decide for itself which path will lead towards the greatest prosperity. Some things, however, are evident. Trying to imitate the Chinese examples of Tencent and Alibaba will be foolish. The regulatory infrastructure is set against it. Instead, we at Bruc Bond believe that close, tight-knit cooperation between financial institutions, service providers, local authorities and business provides the right path to your bright future.
Such integration would provide solutions on the many woes felt by medium and small-sized businesses (SMEs) due the upheavals inside the European banking industry, which Mr Nachum recently wrote about in the article for your 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 simply be achieved by true, sustained openness. Regulators can help, by mandating information sharing, however the onus is on the actors inside the markets themselves to produce frameworks that encourage cooperation. These may be limited schemes to begin with, that grow deeper as trust develops. Doubtless, this could require some feats in the imagination, when some from the brightest minds build relationships these issues, they can, we’re confident, develop some creative solutions to the issues that vex bankers. The next banking revolutions demands it.