FinovateFall 2020: Banking-as-a-Service shows industry’s future value
While the lines can be blurred between open banking and Banking-as-a-Service (BaaS), it’s in the latter where real value can be found.
That’s according to a panel of banks speaking at the virtual FinovateFall conference this week.
Jenny Mustazza, executive director at JP Morgan, says things can be “a little bit blurry”.
“European open banking and US open banking are slightly different,” she explains. “In the US it’s about accessing new functionality as well as just accessing data.”
For Alex Yang, director of CashPro API strategy at Bank of America, open banking and BaaS are very different.
He says that with the ongoing COVID-19 pandemic the industry is at “an inflection point”.
“Open banking as an ability to offer to services is great but BaaS is about creating an attractive service without necessarily managing the customer relationship.”
Mustazza says she is excited about connectivity between banks and corporates becoming easier. “It will make things easier for third parties to service clients, use data and execute. I’m excited to see where new payment methods go. It’s going to explode.”
Young adds that there is an increasing focus on standardisation going on in the industry. He believes that if APIs and connectivity is spread on a global level then financial institutions can compete with Big Tech firms.
Roland Folz, CEO of Solarisbank, says that legislation in Europe has facilitated connectivity among different players and created user democracy.
“The big change that we have been noticing over the years is that the key focus was originally in payments.
“That’s a business with huge volumes and very thin margins. So, the shift now is going towards stickiness in accounts.
“If you can offer a full account within your ecosystem it gives you all the flexibility to add additional products and services and create additional value.”