Open Banking: Integration 4.0 Part III

Open Banking: Open Competition

The digitalisation evolution of technology continues to draw an out-of-line graph, leaving behind the players in the banking and finance ecosystem in particular. In the face of big players that cannot keep up with this extraordinary live flow, users who benefit from products and services use the services of financial technology organisations (‘FinTech’) and demand more practical products and services from every player operating in the sector. Therefore, it is important that organisations in the open banking ecosystem design their services by considering the factors or needs of the target audiences.

In this life cycle, the primary needs analysis, information on the target market, individuals or institutions related to the planned activities, marketing strategies to be implemented, financial innovation and financial inclusion strategies, competitive conditions compared to the size of the ecosystem and the targets for transition to a cashless society will be decisive on the axis of market entry and growth strategy based on detailed, numerical and analytical data.

Fintechs are generally born at the start-up level and have succeeded in combining user experience with digital transformation in an effective practice, independent of well-established technological and financial structures. In this respect, it would not be a wrong interpretation to state that FinTechs laid the first foundations of the process in which traditional banking will disappear; organisations such as payment institutions, payment order initiation service providers, account information service providers, electronic money institutions, mobile payment institutions, crypto asset clearing platforms will be the most widespread and established institutions in the following years.

Expansion of the Financial Base through Financial Innovation

Open banking, which is an innovation network in itself, is based on the aim of solving the common problem of the countries of the world, which is the lack of widespread and established access to financial services. Likewise, it is essential that organisations considering taking part in the open banking ecosystem build their strategies based on detailed data on the extent to which they will contribute to the expansion of the financial base and through which innovation methods they will do so. Only in this case, open banking platforms will be able to provide autonomous ‘banking’ services equivalent to the value they want to create, and they will be able to build their own innovation networks on this network.

What Will Financial Life Look Like in the Near Future?

Open banking, which was initially perceived as a technical legislative change, is now seen as an ‘opportunity’ by all stakeholders and has become a turning point that completely changes and will change the financial infrastructure and practices of countries. A future in which all real or legal persons can fulfil their financial requirements such as payment, borrowing, investment, insurance, etc. independently of time and space, and perhaps even decentralised, is currently being experienced.

The value created by this financial innovation will undoubtedly fill the last gaps of the digitalisation bridge at the point to be reached with the vision of financial inclusion. The last pillars of this bridge will be completed with a cashless digital world where the informal economy is eliminated and payment services, service providers and users will establish mutual trust relations more firmly. This is evidenced by the competition and digitalisation race among conventional financial institutions, taking into account the blockchain technology, big data analytics, etc. technologies pursued by FinTech organisations.

Digital transformation, digital banking, digital systems and all derivative applications, including open banking, are training all the dynamics of the finance sector, especially in the roof structure, to become the ‘self’ of digital. In this respect, the architecture of this transformation, the design of the dynamics that should be in terms of procedure and principles, and all third-party factors should be designed as a whole and in a way that will not harm the umbrella structure, but in any case, it should be designed in a way that will challenge and improve it.

This article was prepared by GRC LEGAL – Av. Mehmet Şahin on behalf of FINTEO, a member of FINTR.