Questions around accountability should problem occurs around Open Banking relationships were raised by Jim Wadsworth, UK product director at Mastercard, at a retail banking conference in London this week.
“This is different to the Facebook or Twitter world. If Twitter goes down for half an hour nobody really cares, but if someone has access to my bank account and sends my money elsewhere that I wasn’t expecting, that’s clearly a problem,” said Wadsworth.
“If something goes wrong who do I talk to? Do I talk to the third party? Do I talk to [fintech banking provider] Tink? Do I talk to the bank? I don’t know.
“And that component is very important, and again banks are well placed here provided they actually position themselves to know what is going on and do something about it.”
According to Wadsworth, ultimately the blame will rest with banks.
“There are very real concerns not just for the customers but for the banks as well. The banks will end up holding the baby if this goes wrong. In the end what will happen if somebody steals the money, or whatever else, it will be the bank that has to put things right,” he said.
With Open Banking being a regulatory driven service, it hasn’t taken into consideration “the 99% of cases of what happens when it goes wrong,” according to Wadsworth.
“It’s all very well having a million APIs available, but if I am a third party small player with two or three developers, I want their time completely focused on building their products and services than doing the really distinctive stuff. I don’t want them having to deal with the fact that bank X have just changed their API again, or there is some sort of operational problem.
“It starting to become an interesting challenge. If we want Open Banking to become a success, then actually one has to think about all of these what ifs, as well and do something about it, not just hope.”
During a panel discussion earlier in the conference, when asked whether Open Banking is, in fact, opening up new revenue streams, Ewan MacLeod, chief digital officer at Nordea said there is an opportunity if the right technology is adopted. MacLeod gave the example of a bank he had spoken to which had partnered with a fintech that could provide real time transaction data.
“At midnight or one o’clock in the morning, most banks find out how much money they’ve actually got. Real time systems that many of the fintechs have, now that is actually quite critical to a big bank. That is why at Nordea we are doing a core bank replacement, and it’s a nightmare. It’s a billion-euro nightmare. We are replacing all the spaghetti with the new stuff, and the new stuff is very fast and very cost effective.”
Following the Open Banking theme, Martin Ekenback, business development director at Tink raised the question of trust in the new market dynamic.
“The flip side of it is, would you trust someone else more than a big established bank? If you are a challenger bank, you probably are very technically capable, and you’re starting from a clean slate with legacy, but then you have to earn trust but as a big financial institution that’s really one thing you’ve got. You’ve got your brand and you’ve got trust.”