Open Banking with Steve Boms | E202

Jason talks to Steve Boms, executive director of the Financial Data and Technology Association, a.k.a. FDATA. FDATA is a global trade association started in 2013 - 2014 in the UK.

Episode Highlights:

• 05.38: Steve says, you don’t need to understand the mechanism of how electricity is traveling from the power plant through the transformer into your house. Similarly, we have to think about open banking. But you need to know what happens if something goes wrong.
• 07.52: Open banking is all about competition, and it is all about a more inclusive, more accessible financial services system that meets you as the consumer where you are rather than it being dictated to you by a large financial institution. 
• 17.45: Steve says you can let the industry figure out the standard and the technology to make it work. And this is how the third-party bank gets approved to play in the sandbox. 
• 18.31: Home automation is nowhere near what it could be because you have to worry about these things, says Jason.
• 19.25: If you talk to the Financial Conduct Authority in the UK, some of the regulators that were part of the implementation of this will be the first to tell you that we didn’t get this all correct, and we knew we weren’t going to get it all correct, says Steve.
• 25.18: The future of any large bank, if they are smart enough, is to adopt the revolution to becoming banking as a service platform as fast as humanly possible to seize that opportunity. But executives aren’t rewarded for that kind of innovative thinking and banking unfortunate traditionally, says Jason.

3 Key Points:

1. Open banking is the digitization of financial services. It is a free and competitive marketplace for a consumer to decide which service provider you want to choose and provide you with the product or financial service. That service provider can be a bank, or it can be a nonbank.
2. Steve says that the President of the United States earlier this year put out an executive order on competition, and this was one of the things he called out that even in the US, where you have 10,000 financial institutions and thousands of fintech, there is still not enough competition and we are not meeting the promise of just how innovative, and competitive this marketplace could be. We need to have open banking, and the government will have to mandate it. 
3. In Canada, a lot of our group’s conversations with the Department of Finance have been around keeping the Canadian financial services regime competitive against Europe and the UK, as they are catapulting ahead on open banking, and Canada hasn’t.

Tweetable Quotes:

• “In theory, the government only has one concern: what is the best case for our constituents and our economy more broadly, and our view is that data is the best outcome.” – Steve
• “Never underestimate an institution’s ability to be spiteful if it’s not in their best interest to be cooperative, and this is where legislation matters.” – Jason
• “When you bring in a set of companies or use cases that are not regulated or supervised to the extent that a large national financial institution’s initial reaction is this is unsafe.” - Steve

Resources Mentioned:

• Facebook – Jason Pereira’s Facebook
• LinkedIn – Jason Pereira’s LinkedIn
• Woodgate.com – Sponsor
• Steve Boms – Website 

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