Open Banking Is Open For Business

Open banking is rapidly heading to the top of the agenda for retail banks across the globe. BBVA today announced the launch of its open banking business, joining the likes of Nordea, which launched its open banking site in March. In the UK, the Competition and Markets Authority obliged the top nine banks to create an open banking standard; the first stage was reference data (e.g., branch opening hours and loan data), which was delivered in March. However, open banking isn’t limited to Europe. In Australia, the House of Representatives recommended the development of a binding frameworkto underpin data sharing for open banking; in April, the Monetary Authority of Singapore announced plans to make its own data available via an open application programming interface (API) and made no secret of its enthusiasm for open data. We’ve seen no formal moves in the US so far, but The US Bureau of Consumer Financial Protection put out a Request for Information Regarding Consumer Access to Financial Records in late 2016.

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Digital Wallets Are Poised For Growth – But Adoption Will Be Slower Than You Think

Digital wallets appear to be so compelling – simplifying life for the customer (check), always present (check), location marketing (check), loyalty and rewards (check), multiple payment types (check), digital delivery (check) adoption…hmmm, not so good.

So why are consumers not flocking to the promised land of Apple Pay, Android Pay and other digital wallets?

Well they are...sort of. You have to look to China to see the promise of a wallet fulfilled, where Alipay has left its humble payment origins behind and now moved into smart cities. It lines up alongside the lifestyle platform WeChat; as well as shopping, paying bills and taxes with WeChat Pay, you can also schedule hospital appointments, order a taxi, apply for a visa or file your taxes. The numbers are staggering: according to this article by The Drum, 420 million people used WeChat to send 8.08 billion “red envelope” digital payments over Chinese New Year alone, almost double the transactions that PayPal had during the whole of 2015. But China is a special case – born straight in to a digital world, wallets arrived without legacy, without competition. Head back to the West and you start to understand some of the challenges – highly competitive markets, fragmented providers, disintermediation fears from banks and card issuers, trust issues from consumers – it’s just not China.

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