Open The Bank Windows, Please

Open banking is like a Pandora's Box that opens up many questions and disruptions, which both banks and their fintech neighbours need to face

- Pratima Harigunani

There are actually some countries where a five-or six-year-old kid can get a veterstrikdiploma. Yes, a certificate for tying shoelaces - successfully.

This utmost basic and silly sounding skill can, however, matter a lot for the not-so-five-or-six-year-olds in businesses that are facing disruption. After all, they have been sitting on armchairs and well-earned comfort zones for many decades now. To run the race that tech giants and fintech natives challenge them to, banks would need to tie their shoelaces fast and tight for sure.

But there is one knot that would be hard to master. Not because of difficulty but because of visible hesitation and under-the-surface complication. Some of us know it better as the oxymoron called 'open banking'.

And yet, it is becoming a future paradigm of sorts powered by new competitive and regulatory dynamics. It is where banks can use APIs (application programming interfaces) or any such models that help them connect easily to the entire ecosystem - which, of course, includes third parties and fintech players. Ostensibly, this can be just that tunnel that helps banks expand their reach and scale. Or help them serve their customers with lightning-fast speed.

For fintechs, it can be just the road they needed to connect to the big city that houses customer data. They can make their hops for delivering what they deliver again without friction and with better personalisation. It should help them with the biggest challenge they face. Fintechs, ideally, try to provide visibility to customers, which is real-time and granular. But most banks do not allow the connections to happen or the bridges to be welded. Some fintechs that do not have the API capability - that open banking would provide - end up using native integrations or tactics like scraping from websites.