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Data for today’s episode is provided by Mercator Advisory Group’s report – The Emergence of API Platforms: Open Banking and Payments Drive New Business Models.
Open Banking has two negative characteristics:
- A contrarian view of Open Banking would mention its regulatory and technical complexity
- A contrarian would also mention Open Banking’s dearth of proven revenue opportunities
- PSD2 & CMA are designed to accomplish the following:
- Encourage new competitors including banks & fintechs
- Apply pressure to existing pricing and bank account revenue
- Increase expenses for existing banks vs. venture backed start ups
- Improve account holder data access, aggregation, PFM, and account switching
Mercator Advisory Group has released a report describing the technical and regulatory challenges delaying the implementation of the European Union’s PSD2 Open Banking mandate and contrasts that with the rapid growth in new application programming interface (API) driven platforms that operate in the cloud. There has been a surge in platform-as-a-service (PaaS) solutions utilizing APIs.
The report, The Emergence of API Platforms: Open Banking Drives New Business Models, identifies the technical and regulatory issues that continue to be challenges to lift-off for the European Union’s open banking vision and contrasts that situation with the structures that have driven a surge in the availability of cloud platforms that utilize APIs to enable similar services, such as payments.
“In a past report we identified the game-changing value proposition associated with internet-based application programming interfaces. This report identifies why the implementation of APIs has failed to help the EU Open Banking initiative gain liftoff even as these APIs have created a surge in the number of cloud-based platforms recently announced,” commented the author of the report, Tim Sloane, VP, Payments Innovation, and Director, Emerging Technologies Advisory Service at Mercator Advisory Group.
This research report has 20 pages and 10 exhibits.
Companies and other organizations mentioned in this report include: Bank of America, The Berlin Group, Citibank, Citizens Bank, European Banking Authority, Fidor, Financial Conduct Authority, Mastercard, Railsbank, solarisBank, Visa, Vyze, and Wells Fargo.