Open banking provides both a threat and opportunity for financial institutions in the future. Banks and credit unions can either sit on the sideline, or leverage the power of open APIs to compete with both small and big fintech providers. Check out this article by The Financial Brand to learn more about open banking!
Regulations around open banking, like PSD2, will soon prove to be a boon for technology giants like Google, Amazon, Facebook, Apple and other tech giants – providing wider access to customers’ financial data (currently held by banks) and allowing these firms to restructure their marketing strategy towards product/service expansions. With consumers in their 20s and early 30s becoming more and more receptive towards banking services offered by non-financial services companies, open APIs come at an opportune moment for these tech giants.
These players have already entered the financial industry with Google Pay, Apple Pay, WhatsApp Pay and Amazon Pay. Amazon is also reportedly in talks with JPMorgan Chase, Capital One, and other financial services firms to set up an Amazon-branded checking account for its customers. These new-age tech giants are characterized by their younger, more innovative approach to customer engagement; and experts think it’s time for banks to follow suit.
Though banks have managed to survive the threat from fintech startups till now, the threat from large tech companies continue to loom large for the banks to survive in the fast evolving financial sector.