Open Banking is Millennial to the Core

By Frédéric Olivier (B-Hive) and Trendwolves

Open Banking is Millennial to the core

 

Spanish bank BBVA recently launched its Open Banking Business, which allows third parties to use and integrate BBVA’s financial data for their own purposes. The idea behind open banking is that cooperation is the only way to innovation, and it is one of the core beliefs of Millennials.

From January 2018 onwards, European banks have to provide other businesses access to customer’s accounts, if a customer has given his or her consent. With the Payment Services Directive (PSD2), EU regulators aim to increase competition, improve customer service and promote the development of online and mobile payment systems.

The software code which gives these other businesses access to the bank’s data systems is called API’s (Application Programming Interface). API’s are the mechanisms that allow two pieces of software to exchange messages or data in a standard format (Watch the video below if the former sentence doesn’t suffice).

BBVA has been leading the way by exposing a range of its APIs to approved developers. Their APIs include customer profile data, key account data, money transfer services, and aggregated card purchase data.  By making these API’s publicly available, everyone can integrate the financial data into an app, a service, a technology or a business. For example, based on the API, an app could provide customers with enhanced insight into their spending habits and products; along with services that will allow them to manage their financial affairs and make decisions that fit their lifestyles. Another example: a retail shopper might finance the purchase of a product using a loan from BBVA via a loan button embedded in the checkout screen.

“The great thing about Open Banking Business is that we can think up some basic uses for our data and API’s,  and build a service around those,” says Raúl Lucas, BBBA’s Head of Open APIs in Spain.“But when we make them available to third parties—the ones who really know their businesses—they come up with uses which would never even have occurred to us.”

Lucas touches upon the core of Open Banking, and at the same time upon the core of Millennials. The idea is that together you’re stronger than alone, and that in order to come up with new ideas, you have to accumulate the power of many. Cooperation is one of the core beliefs of the younger generations. For other generations, It is not always easy to grasp the profoundness of this conviction. However, Millennials are growing up in a world and in societies that face enormous challenges. Something has to be done, but it can’t be done alone. So working together is the only option. Secondly, youngsters have never known a world without social networks, and they’re faced daily with the power of the number and the power of co-operation. For youngsters, working together is a no brainer.

A great example of Millennial co-creation is a hackathon, in which youngsters (and semi-youngsters) unify their forces in order to solve a problem or a challenge together. Challenger bank Monzo (formerly known as Mondo) has put two and two together: they organise hackathons on a regular basis, and invite young developers to get creative with Monzo’s open API. Results range from Amazon’s Echo and Google Home applications to a live financial transaction feed on your desktop screen, or an app which maps out where you have spent what in the last week.

Open banking provides incumbents and Fintech both with a great opportunity to bond with the younger generations, and getting them involved in the process of creating the next financial services that we will all benefit from. Remember: the next big thing will be a lot of small things. And it will have been made by a lot of individuals building upon each other’s knowledge, skills and experience.

References:

BBVA puts its open APIs into the wild. Business Insider. 25/05/2017

MondoHack III — A wonderful Hackathon. Medium. 12/02/2016

 Embracing Open Banking. International Banker. 18/05/2017

 BBVA launches its Open Banking business. BBVA. 24/05/2017