Shadi Saifan, vice president of engineering at NCR Voyix, told PYMNTS in an interview that bridging the gap between the promise of open banking and making that promise a reality is easier said than done, especially in the United States.
He noted that in Europe, regulators and governments have played the prime role in advancing open banking, as well as open banking principles. The critical components have been the data sharing and the control of personal data, which has been put firmly in the hands of consumers.
By contrast, said Saifan, “the approach that the United States has taken has been an industry-led approach.”
In that case, education from banks and the introduction of new cases are going to help move the needle in the embrace of open banking and help make individuals feel more comfortable with how their data is being used — securely.
Banks must look toward building an open, larger ecosystem amid the continued digital transformation, accepting that disruptions (often from FinTechs) should be embraced, he said.
“A single financial service or a single financial institution may not be able to offer everything that your consumer really would like to enjoy and would make a difference to them,” said Saifan, who added that the larger financial services ecosystem has and must include FinTech companies that are innovating, in general, more quickly than traditional banks. On the other side of the equation, the FinTechs operate as “part” of what a traditional bank offers — creating value-added offerings to consumers at scale.
“Collaboration and cooperation drive revenues,” said Saifan.
On the consumer side of the equation, to ensure comfort with security and that data is being used in ways that cement trust, he said, “we need to look at the consumer as an identity and not a username and password.” There’s already a foundation in place, as clients already trust their banks and house their money and savings with traditional players.
Developing the use cases will take time, but some of the low-hanging fruit includes account aggregation, where individuals can view the details of various holdings and activities (even across several institutions) in one place. But we’re moving toward a future where data, stored with a creditor, can be used to apply for another loan, sped up and streamlined by secure data sharing.
“If I’m able to authorize another creditor to look into my data, that means I can get an instant answer quick for my car loan or mortgage or credit card or any loan that I have or want,” he said.
Similarly, the principles behind account aggregation can make other aspects of everyday financial life easier — such as managing subscriptions.
Looking at the future of open banking in the U.S., “we’re doing it in a way that’s organic,” Saifan said, adding that more tailwinds will come as standards coalesce around open banking APIs.
“There should be very little doubt that open banking will expand and is here to stay,” he told PYMNTS.
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