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The Bottom Line

A colleague of mine once said, “God was able to create Heaven and Earth in six days because He did not have an installed base of users.” Anyone who has spent any time in the software business understands this axiom all too well.

This is essentially the premise behind technical debt. As soon as your institution commits to a solution and begins adding customers or members to it, constraints emerge making it difficult to enhance or upgrade the technology.

One year ago, almost to the day, Fiserv surprised the payments world by announcing its acquisition of First Data, setting off a wave of payments consolidation that by midyear had narrowed a list of six leading processors and bank service providers down to three. Following this flurry of activity, it was widely assumed that FIS, Global Payments and Fiserv would be occupied with integration tasks for the foreseeable future, potentially leaving payments M&A destined for a short breather. But wait – there’s more.

One of the hottest topics in banking – for financial institutions as well as third-party providers – is data sharing. Banks and credit unions possess terabytes of such information; many organizations that are not financial institutions covet access to this data to increase the value they bring to consumers.  This value could manifest in many ways, from a simpler customer experience to providing personalized offerings that anticipate the user’s need. 

In a recent blog post, we outlined the lessons learned in the year since the UK’s Open Banking regulation took effect. The Open Banking concept is hardly confined to Great Britain, however. Countries as geographically and culturally diverse as Singapore, Australia, Holland and Canada have also embarked on similar endeavours to alter the dynamics of their financial services sectors – thus also altering other interconnected sectors.

Although it’s difficult to envision a similar top-down mandate in the United States, there is growing evidence that many of Open Banking’s features will become part of the American landscape through other means. Yet, depending on where you look, commentators cannot agree on the impact of Open Banking’s introduction in the U.S., whether it be success, failure, positive or negative.