LFP097 – Open Banking – Damp Squib or City of Revelations? Nigel Verdon Railsbank

Many electrons have been agitated to produce patterns of light and dark on this topic. Which is probably more interesting aphenomenon than the average article on Open Banking. Ignore it we cannot however and uber-Fintech Guru (in the true sense, not self-penned LinkedIn encomium) Nigel Verdon, founder of Currency Cloud and now founder and CEO of Railsbank joins us to work out what is really going on and where challenges lie.

Nigel is no mere Fintecher with his own opinion. Way back in LFP024 Nigel shared his experience of 25yrs in Fintech – and hardcore fintech at that from doing the first online FX deal in 1992, through running digital markets at Dresdner Kleinworts to founding Currency Cloud. Since when he has VCed and now for some time been CEO and founder of Railsbank.

So someone with a very informed opinion.  Open Banking is very much an evolving topic. So LFP060, an overview with Paul Thomalla at ACI Worldwide, is still #2 in the LFP all-time download charts.  As recently as LFP087 Louise Beaumont argued that its not really about tech & reg but far more about strategy.

Topics discussed on the show include:

  • hiring meeting rooms by the square metre
  • the rainforest and cloud forest of Costa Rica
  • Costa RIca hasn’t had an army since 1942 (!) – now wouldn’t it be nice if that meme caught on around the world 🙂
  • Costa Rica as a Switzerland/Bhutan cross in Central/Southern America (&other promotional material from the Costa Rican Tourist Authority :-D) – a very happy, friendly country
  • recap Open Banking and PSD2 (only a section of which is re open banking)
  • allows permissions for a third party to initiate payments and/or to read data and banks have to allow these processes
  • the rationale/spirit behind this whole change around service and competition/innovation
  • the actual nature of all this being APIs
  • these being directly an irrelevance for the consumer – consumers don’t write APIs – hence the damp squib nature of the launch Jan13th
  • what has changed is industry infrastructure [pace delays from some banks]
  • “we are at the complete cusp of a 2-3yr process of anything that will benefit the consumer”
  • this hasn’t been well explained by the mainstream media
  • the nature of investment into Fintechs and PR ending up with those who are biased towards/over-hype the potential impact of a reg change
  • Metro Bank’s COO who suggested it will take so many years to make a real difference that the newbies will have run out of capital long before then
  • a comparison the first wave of online/”digital” banks
  • the only change in the modern wave is user interaction – its still the same banking underneath
  • comparison with the early days of the App store – APIs provided and who knew where it would go
  • some long pause until we see real changes/interesting applications; neither of us have seen any yet; the lack of radical ideas
  • accessibility drives usage
  • the long term demographic game of attracting young people to your app-only bank
  • will the current account become a utility?
  • “the real game here is who is your permanent, daily, way of accessing the internet” – importance of WhatsApp, WeChat, FB Messenger et al in re
  • chat vs filling in forms
  • the chat Apps are well placed to leverage Bank APIs
  • how Banks should react to this new landscape
  • the land grab game going on in App-Banks
  • will “the banking” disappear into the background?
  • the unintended consequences of Open Banking
  • “data-haves” and “data-have-nots”, data-rich vs data-poor people and the impact of this
  • “data-exclusion”
  • 8m unbanked people in the UK; 82m unbanked in Europe; 2bn worldwide
  • it’s very difficult/costly to interact with the mega-banks global transaction infrastructure; Railsbank solves this by being the world’s first digital transaction bank – wholesalers,B2B
  • Railsbank work with 50 banks around the world and connect these all seamlessly under their logo
  • Open accounts in seconds, send and receive money all around the world, issue cards, convert money, collect money through Direct Debit
  • You can open an account with Railsbank (and then do all the above) in under 5 days – cf the months it would take without Railsbank
  • Railsbank take financial lego, APIs and hook it all up under one API
  • “Railsbank is a Global Bank that works in the world of instant”
  • compliance is built-into their platform for each counttry
  • Railsbank is properly digital – making orders of magnitude difference compared to prior products
  • they are live in the UK, Europe, opening in the US in 2018H1
  • a shout-out for SE Asia partners
  • Railsbank are hiring

And much much more 🙂

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