Eyal Nachum of Bruc Bond to Banks: Embrace Openness

Eyal Nachum, Bruc Bond’s fintech guru and board member, includes a message to banks: it’s time for you to embrace open banking and the cooperation it can bring. The advantages of working together 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 both in the European Union along with Asian markets towards this goal. Europe’s Payment Services Directive (now rolling around in its second iteration, the PSD2) served as the kickoff shot on the continent. It showed the banking system on the entry of so-called non-bank finance institutions (NBFI) , who may have taken on large chunks of the labour previously produced 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 struggling with downsizing pressures.
However, integration could possibly be taken much further, says Eyal Nachum. If we glance at the Chinese giants Tencent and Alibaba, we view a model banks may decide to imitate to your degree. The two companies operate Super Apps, WeChat and Alipay, respectively, less complicated more than payment services. These are so-called “lifestyle apps”, which permit users to perform anything from ordering taxis, through making interpersonal money transfers, to, in most Chinese provinces, paying bills and more. It’s easy to imagine the convenience that such centralisation brings.
According to Eyal Nachum, there’s no need to consolidate everything in one place, but tighter integration may be possible and desirable. If we turn to Singapore, we see the likes of DBS, one with the country’s leading banks, launching its car marketplace in partnership with sgCarMart and Carro. UOB, another leading Singaporean bank, recently launched its travel marketplace. These imaginative pursuits could be a lighthouse to European banks, who should employ whatever possible way to learn from other Asian counterparts, for example by means in the UK’s fintech bridges, which Mr Nachum recently discussed with all the Sunday Times.
Under the PSD2, European banks and financial institutions are mandated to deliver application programming interfaces (API), by which other loan companies (like, by way of example, Bruc Bond) can access data and issue authorised instructions on customers’ behalf. Sadly, most banks in Europe have done only the least to comply with regulatory requirements for open banking, in lieu of explore how such initiatives might be incorporated into banks’ strategic plans. This is a short-sighted mistake, says Eyal Nachum.
Banks are missing an opportunity to deliver their clients and customers having a service that can actually get people looking forward to 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 are lots of paths to a open banking future, every individual traditional bank will need to decide for itself which path will lead for the greatest prosperity. Some things, however, do understand. Trying to imitate the Chinese samples of Tencent and Alibaba will be foolish. The regulatory infrastructure is defined against it. Instead, we at Bruc Bond believe close, tight-knit cooperation between loan companies, providers, local authorities and business can provide the right path to some bright future.
Such integration would provide solutions towards the many woes gone through medium and small-sized businesses (SMEs) due the upheavals in the European banking industry, which Mr Nachum recently wrote about in a article to the 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 basically be achieved by true, sustained openness. Regulators may help, by mandating information sharing, nevertheless the onus is on the actors within the markets themselves to formulate frameworks that encourage cooperation. These could possibly be limited schemes in the first place, that grow deeper as trust develops. Doubtless, this would require some feats in the imagination, but when some with the brightest minds engage with these issues, they could, we are confident, think of some creative solutions for the issues that vex bankers. The next banking revolutions demands it.