Laura McGortey, director of strategic partnership solutions at BNY Mellon, claims that there is more open banking activity in the US B2B payments space in comparison to the Eurozone, on the final day of AFP 2019 in Boston.
McGortey highlights that a flux of bilateral and strategic partnerships in corporate payments have resulted in open banking being welcomed in the US as a “market driven phenomenon” - a far cry from enforced such as PSD2 implemented by European regulators.
She goes on to describe how “we no longer have to live in a batch world” and there are three primary differentiators between how open banking has been introduced in the two different markets.
In Europe, McGortey explain that with PSD2, open banking has defined security parameters, defined roles and defined ecosystem governance. Further, “there is a mandate for consumer banks which enables open access to bank accounts at the customer’s request.”
However, she adds that there are no regulated API connectivity format standards despite the large number of participants that “utilise” these industry standards, put in place by the Competition and Markets Authority in the UK, for example.
“While adoption for consumer accounts is enhanced through regulatory drivers, adoption for business accounts is based on market interest,” McGortey’s slides posit.
On the other side of the Atlantic, security parameters are set by the banks and not the fintech industry. Further, there are no regulatory defined roles, regulatory ecosystem governance and no mandate for banks to enable access to bank accounts.
Despite this, in the US, adoption is occurring across both consumer and business accounts on the basis of market interest, McGortey suggesting that regulators in the Europe are prioritising giving fintech firms an open playing field, which in turn, is slowing down the progress of open banking in B2B payments.
The digital revolution is heralding implications for all market participants. This is why treasury practitioners must identify new, emerging opportunities to transform their business and weigh the implication of maintaining the status quo.
Earlier in the session, McGortey kicked off the conversation with a reference to the World Economic Forum’s stance on the Fourth Industrial Revolution and stated that the financial services industry is on “the brink of a technological revolution and the transformation is unlike anything humans have ever experienced because of the unprecedented compute power and increase in mobile connectivity.”
She went on to highlight the change in industry leader designation over the last 15 years, with companies such as Apple, Alphabet and Amazon leading today. McGortey posed a question to the audience and asked how companies have responded to the Fourth Industrial Revolution: 30% revealed that they have hired a chief digital officer and opened a digital department.
During the panel session, Lisa Akahoshi, payments strategy lead, Verizon and Jeremy Ordone, director, banking and cash management, Marriott and Wayne Bognar, treasury manager, Evoqua Water all explored how a number of companies are at a crossroads and are unsure of whether they are an organisation in their industry, or a technology company with products and services in their respective sector. Mobile phones have transformed business in this way.