"Open Finance Isn't Just a Trendy Phrase" - Exploring the Essential Components of Open Finance
In the ever-evolving world of finance, Open Banking has emerged as a significant player. At the helm of this movement is Caroline Jenke, the CEO of Visa's Open Banking platform. With over 15 years of experience in the banking and fintech space, Jenke is a pioneer in the industry.
Open Banking, now a reality, is demonstrated by the fully automated loan application process at DKB. Powered by Tink, this innovative process utilises real-time data to offer speed, error avoidance, and an improved user experience. The intelligent and GDPR-compliant retrieval of pay stubs and household receipts sets a new standard for efficiency in the loan application process.
However, the adoption of Open Banking has been a slow process, particularly in certain markets like the US. Critics argue that despite specific successes, such as the one at DKB, broader adoption remains limited. This slow pace contributes to ongoing problems accessing credit, with many consumers still facing loan rejections due to credit rating issues or lack of integrated data sharing.
Jenke, however, believes that those who claim there is no customer demand for Open Banking may be afraid of losing data sovereignty. She advocates for the quality, frequency, and services around data to be monetised, but not the data itself.
The relationship between banks and fintechs has evolved from confrontational to cooperative, a trend that is discussed in depth on the podcast, Marvin & Julian. This cross-industry cooperation is leading to the development of data-driven ecosystems, benefiting both banks and fintechs.
Jenke also sees great potential in the B2B2C model, where data can be shared to enhance and create new products. She emphasises the importance of a clear regulatory framework for Financial Data Access (FIDA), the next phase of Open Finance in Europe, but warns against hindering innovation.
In FIDA, data should not only be exchanged but also shared, according to Jenke. This shared data can be used to power automated household accounting and AI-based financial assistants, providing valuable services to consumers.
Monetization of interfaces is a contentious point in FIDA, with Jenke advocating for balance. She criticises those who claim that Open Banking has failed, arguing that the focus should be on addressing systemic limitations rather than inherent technology failures.
Tink, a technology partner and bridge builder between banks, fintechs, startups, and insurers, embodies this collaborative spirit. The company positions itself as a facilitator, helping to break down barriers and foster cooperation in the financial sector.
Despite the challenges, Jenke remains optimistic about the future of Open Finance. With a successful strategy requiring a focus on strategy, infrastructure, and market access, the potential for transformation is immense. As the industry continues to evolve, it will be interesting to see how Jenke and her peers navigate this exciting new landscape.
[1] Source: Open Banking Report, 2021.
The B2B2C model, advocated by Jenke, sees data being shared among banks, fintechs, and start-ups to enhance and create new products, driving innovation in the Open Finance realm.
Jenke, while addressing monetization in Financial Data Access (FIDA), advocates for a balanced approach, emphasizing the need to monetize services around data rather than the data itself.
