Payments Business Magazine Spring 2020

CONNECTED & OPEN BANKING

Making the open banking transition By Hamed Arbabi

T

Hamed Arbabi

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PAYMENTSBUSINESS

he rise of FinTech companies around the globe opened the Pandora’s box on the question of who owns the financial data and what will they do with it? The way that the current financial services ecosystem operates in Canada, and in most countries, other than notably the U.K., is that the banks, not their customers, own customers’ financial data. At least not yet. Moreover, this financial data, such as balances and transaction histories, are often unorganized and siloed, so much so that it limits a bank’s ability to access and use them in a meaningful way. Even when the information is accessible, a bank’s IT infrastructure often cannot compete with innovative FinTech startups that are more agile and hyper-focused on solving specific financial challenges. Consumers (especially Millennials) now expect — and demand — the same level of choice, control, user experience, security and innovation that they receive from other industry’s products and services. Consumers are, as a result, fuelling a major disruption in the financial industry, turning partially (if not wholly) to bank alternatives. To help smooth the transition into a future with superior financial services, a collaborative model between financial institutions and FinTechs aims to bridge the gap between data, banks, consumers and technology. It’s called open banking. SPRING 2020