DN Intersect 2019: US Banks are “already beaten” if they ignore APIs
US banks and credit unions are “already beaten” if they don’t start thinking about the opportunity of APIs, says Diebold Nixdorf’s business development and marketing manager, Scott Anderson.
In a talk sharing the basic concepts of open banking with US financial institutions, Anderson reminded his audience that APIs “aren’t going away, and neither is open banking”.
“It’s time the US starts paying attention to open banking,” says Anderson. But first, the country’s banks need to figure out how they’re going to retrieve standardised data from their customers. Only then will they be able to consider how they share it with other financial institutions.
Anderson held up the UK as a leading example of successful open banking. “The UK is a leader in the space,” says Anderson. “They have more of a consumer advocacy approach and they’re more regulatory-driven with mandates.”
When it comes to the US, the first step Anderson advises they take is to become compliant. This is one of the only ways these institutions will be able to be a banking platform for the retailer, consumer and other banks.
For Anderson, it’s about seeing open banking as an opportunity rather than a vulnerability. The US has been slow to adopt the new banking ecosystem, trailing behind Europe and parts of Asia.
The financial landscape of the country makes it harder to adopt open banking en masse, because there are a huge number of small banks and credit unions without a budget for digital transformation.
This is why Anderson doesn’t focus on mobile payments as a driver for open banking. Instead, he argues that “reducing customer friction” is the main driver.
He anticipates “the tidal wave” that is open banking very soon in the US. Instead of fearing it, Anderson reassures banks and credit unions across the country that it will push them to be more competitive.
Whether that means it’s the end of the road for many without the resources for these transformations is yet to be seen.