Banks and Fintechs: How to Develop a Digital Open Banking Approach for the Bank’s Future

Abstract

Mutated market conditions, the advent of new players and digital technologies, and a significant regulatory push, are profoundly changing the banking industry. Banking business models may shift significantly from a pipeline, vertical, paradigm, to open banking models where modularity can be an opportunity for banks. Not only are the abovementioned factors representing a threat to the traditional model, but also they are spurring significant new opportunities to pursue new revenue streams. Those opportunities are exploited through new banking paradigms that entail higher levels of openness towards third parties and a crescent number of modular services bundled together. Models can go to mere compliance with the prescriptions of openness of PSD2, to the inclusion of new services, the opening of the banking core and data, and the aggregation of those within a platform experience. Value is created in platforms through economies of scope in production and innovation. This paper has explored the evolution of Fintech and Techfin in the market and the emergence of platform models in banking. It has investigated the evolution of that concept, also introducing an interesting banking case (BBVA), which gives several insights on the choices made toward a Banking-as-a-Platform model within the context of Fintech and Open Banking.

PSD2 influence on digital banking transformation: Banks' perspective

“…APIs come with technical specifications, testing capabilities and clear legal and operational conditions under which they can be used. For many years, major companies called Techfins (Omarini, 2018) such as Google, Twitter, Facebook, and Uber have been offering APIs to third parties for data sharing and platform connectivity (Forester, Rolfe & Brown, 2017), since 2006 they have also started to be used in the financial industry (World Economic Forum, 2017), while today they are imperative. PSD2 obliges all banks to allow TPPs to access account information and payment initiation services if and only if the buyer has explicitly authorized TPP to initiate such requests and if TPP is registered by the competent financial authority of its home country (Forester, Rolfe & Brown, 2017).…”

“…However, while banks have high security, third-party applications are not under the same scrutiny and do not consider security a priority, but considering that banking applications are required to provide APIs for third-party applications, they should adopt the same security standard (Noctor, 2018). This is also shown by the fact that card schemes and e-merchants are putting pressure to postpone the entry into force of the SCA rules for the second time (BEUC, 2020).In addition, banks face new competition, with PSD2 causing them to have a lower direct interaction between them and its customers, which weakens their ability to sell other products or services, detect fraud (Wolters & Jacobs, 2018) and at the same time reduces their institutional position in the everyday life of customers (Omarini, 2018).…”

API Teknolojisi ve Açık Bankacılık

“…Anket sonuçları, katılımcıların açık bankacılık uygulamaları konusunda iyimser olduklarını ancak güvenlik riskinin katılımcılar üzerinde etkili olan negatif bir unsur olarak yer aldığını ortaya koymuştur. Omarini (2018), bankalardaki fintek ve açık bankacılık uygulamalarını Banco Bilbao Vizcaya Argentaria örneği üzerinden incelemiştir.…”

FinTech: A New Hedge for a Financial Re-intermediation. Strategy and Risk Perspectives

“…There are many definitions of FinTech (Omarini, 2019 , p. 198); however, it can be summarized that one main feature regards any technology that may reduce or eliminate the costs of financial intermediation especially in three broad areas of finance (Das, 2019 , p. 981): (a) raising capital, (b) allocating capital, and (c) transferring capital.…”