What Next in Banking: Open Bank Blockchain

Open Banking is the exciting new kid in the block; the epitome of financial information that will be a benefit to the financial institutions and consumers alike. This is the API universe. Literally with the flood gates for information open, the fintechs have a playground with sky as the limit. 

What next in Blockchain? This is a great opportunity for fintechs to take advantage of open bank. on a blockchain platform. I am suggesting aggregation of banking services. Let us call this fintech as ‘bank aggregator’.

The bank aggregator will provide a blockchain platform as a market place; a cloud based offering. The simplest eco system (to get the idea across) will have fintechs, legacy banks, retail and small business customers in a peer to peer relationship. These are akin to permissioned nodes in blockchain terminology; a community blockchain of lenders-borrowers, depositors-acceptors and financial service providers. While the regulatory, credit checks and any other verifications will be a standard offering as part of the architecture. On the advisory front chat bots and personal robot advisors will fit into this universe. In this brave new world, let us look at typical use case scenarios.

Use Case 1: John Smith has $ 10,000 to deposit

John smith accesses the bank aggregator marketplace and broadcasts he has $10,000 to deposit. Any of the participants in the eco system can bid with interest rate per period quote. The platform will ensure that the bidder has a cap on their quotes on the basis of credit rating and other checks & balances to prevent speculative bidding. In quick time John Smith will receive several quotes with attached risk information. All that he needs now is to make a choice.

Use Case 2:     Linda Wodehouse is in need of a mortgage loan for $200,000

Linda Wodehouse enters the bank aggregator market place and broadcasts her requirement. The AI component in the aggregator will assess her eligibility using APIs under open bank architecture and determines the eligible amount. Any bidder will be provided with this information. Linda will receive a series of bids for her to choose from.

Use Case 3:  Avatar Guru is in the market place to send a cross border payment of $1000

 On ‘hearing’ Avatar’s broadcast, competitive bids on service pricing and exchange rates flood his dashboard. On making a choice, he is directed to the payment engine by the bid winner.

use Case n: Similar customer-business logic can be extended to private wealth, small businesses etc.  

The bank aggregator will have an automated rating system that is driven by AI and probably machine learning on each of the participants in the eco system. A series of parameters relevant to the service provided will be used to rate without any manual intervention to ensure objectivity and transparency.

The right question now is, Why need a bank?