This referenced blog appears in Finextra, and summarizes points made at the just concluded AFP annual conference in Boston by a BNY Mellon exec about B2B open banking in the U.S.
We at Mercator Advisory Group have received many inquiries about open banking during the past year, much of the interest driven by the advent of PSD2 in Europe, increased cloud usage, and the growing proliferation of APIs.
So in effect, open banking in the U.S. is being driven by market realities based on changing client expectations in line with technology advancements.
‘Laura McGortey, director of strategic partnership solutions at BNY Mellon, claims that there is more open banking activity in the US B2B payments space in comparison to the Eurozone, on the final day of AFP 2019 in Boston……McGortey highlights that a flux of bilateral and strategic partnerships in corporate payments have resulted in open banking being welcomed in the US as a “market driven phenomenon” – a far cry from enforced such as PSD2 implemented by European regulators.’
We surely don’t disagree. The largest institutions have been building external API capabilities for several years, increasingly adding non-consumer scenarios to the mix, such as data integration with self-provided and third party treasury management systems, allowing key constituents to access account data in near real-time for better cash forecasting and so forth.
There is a contrast between Europe, where PSD2 mandates open banking (although generally more directed towards consumer uses) and the U.S., where regulators have, to date, taken a hands-off approach, although various state privacy laws must be taken into consideration.
‘In Europe, McGortey explain that with PSD2, open banking has defined security parameters, defined roles and defined ecosystem governance. Further, “there is a mandate for consumer banks which enables open access to bank accounts at the customer’s request.”…However, she adds that there are no regulated API connectivity format standards despite the large number of participants that “utilise” these industry standards, put in place by the Competition and Markets Authority in the UK, for example….“While adoption for consumer accounts is enhanced through regulatory drivers, adoption for business accounts is based on market interest,” McGortey’s slides posit.’
Things are changing rapidly, not only for banks but also their corporate clientele, who are also in the process of navigating the transforming industrial landscape and figuring out their organizations’ positioning in the world 5+ years from now.
The article is worth a scan to get a real viewpoint from the front lines.
‘During the panel session, Lisa Akahoshi, payments strategy lead, Verizon and Jeremy Ordone, director, banking and cash management, Marriott and Wayne Bognar, treasury manager, Evoqua Water all explored how a number of companies are at a crossroads and are unsure of whether they are an organisation in their industry, or a technology company with products and services in their respective sector. Mobile phones have transformed business in this way.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group