"Open Finance relies on meaningful collaborations, not just empty jargon"
In the world of finance, Open Finance is poised to revolutionise the industry, but it's facing some significant challenges. Caroline Jenke, CEO of Visa's Open Banking platform, has weighed in on the topic, offering insights on what it takes to make Open Finance a success.
Jenke, who boasts over 15 years of experience in the banking and fintech space, criticises those who claim Open Finance has failed or that there is no customer demand. Instead, she sees it as a promising catalyst for democratising financial access, despite the hurdles it faces.
On a recent podcast hosted by Marvin & Julian, Jenke discussed cross-industry cooperation in finance, focusing on banks, insurers, FinTechs, InsureTechs, and corporates. The conversation revolved around the creation of data-driven ecosystems through cross-industry cooperation, covering regulation, technology, and the customer.
According to Jenke, a successful Open Finance strategy requires a strategy, robust infrastructure, and market access. She emphasises the need for active collaboration among banks, regulators, ecosystem partners, and technology providers to create a secure, interoperable, and user-friendly environment.
Robust API security and continuous governance are also crucial, Jenke says, to maintain trust and manage risks associated with data sharing. She advocates for embracing strategic openness—moving from a defensive posture to one of proactive ecosystem orchestration, positioning banks as facilitators rather than gatekeepers.
Jenke also highlights the importance of leveraging global best practices and standards, such as those seen in the UK, Singapore, and Brazil, as blueprints for implementation. She sees great potential in the B2B2C model, where data sharing can enhance products and create offerings not possible without partnerships.
Data, according to Jenke, should not just be exchanged but used together in Open Finance. Examples include automated household accounts and AI-based financial assistants. However, customer sovereignty is crucial in the use of data together in Open Finance.
The relationship between banks and fintechs has changed from confrontational to cooperative, Jenke notes. She cites the fully automated loan application process of DKB, which uses real-time data via Tink, as a successful example of Open Banking. Tink positions itself as a technology partner and bridge-builder between banks, fintechs, startups, and insurers in the market.
Monetization of interfaces is a contentious point with FIDA, allowing more leeway compared to PSD2. Access to customer data should not be commercialized, but the quality, frequency, and services around it can be, Jenke states.
However, Open Finance is entering the next phase in Europe with FIDA, which also presents a new opportunity but also a risk. Bridging the gap requires overcoming incumbent resistance, clarifying regulatory frameworks, implementing strong security and governance, and fostering a collaborative ecosystem with clear roles and standards, as emphasised by leaders like Caroline Jenke.
Those who don't see themselves as part of an ecosystem may lose out in the competition for the customer interface. It's clear that the future of finance lies in collaboration and openness, and Jenke's strategic vision for Open Finance is a step in the right direction.
[1] Source: Open Finance: Opportunities and Challenges, McKinsey & Company, 2020 [2] Source: Open Finance: The Next Phase in Europe, Deloitte, 2021 [3] Source: Open Finance Strategy: A Guide for Banks and Fintechs, KPMG, 2021
Bank technology and cross-industry cooperation are critical for the success of Open Finance, as discussed by Caroline Jenke on a podcast. Jenke emphasizes the need for robust API security, continuous governance, and market access, as well as active collaboration among banks, regulators, and technology providers to create a secure, interoperable, and user-friendly environment.
