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Winners and Losers in the Regulation Vs Competition Debate? How About New Business Models?

The US Treasury Department released what can only be called a “canary in a coal mine” report

You may be saying to yourself, “Mark, you are certifiably crazy; 1) chèvre (goat cheese) crepes are where the crepe pyramid of tasty hits its apex and 2) we have been talking about a lot of these things for years – this is just someone in Washington catching up to the rest of us because we are a competition-driven economy and sector.

While we all have our differences on the sweet vs savory crepe discussion, Nutella is a gift, and while your logic is sound on point number 2, it misses the point. In the US, we are being driven by competition to a certain extent, but what we have learned in the aftermath of PSD2 and Open Banking is that competition can only get us so far. There is a very high barrier to entry that must be overcome. And for the flaws in those regulations, the overall intent has become clear; get more ideas into the market to drive us all forward. In the US, that bar was artificially lowered by the large amount of investment into FinTech startups, but at the end of the day, more than 75 percent of our accounts are held with just five institutions. So while innovation can happen, it hasn’t spread as quickly as it potentially could.

The interesting thing to me, in the whole discussion on regulations vs competition pushing innovation, is the discussion on who “wins” and who “loses” in each model. This argument misses the point of where the “Open” discussion is leading. Claiming someone will win, while someone else will lose, assumes that the current business models that are at play remain unchanged. At the end of the day, they can’t – the current business models have to change to unlock the potential windfall that is sitting on the other side of this debate. We have overused this saying over the past 5 years when discussing the New Payments Ecosystem, however it still bears repeating here; a rising tide raises all boats. And the US just let us know that they are readying the harbor for the incoming tide – I just hope it’s not too late!

Head of Digital Banking Solutions

As the Head of Digital Banking Solutions, Mark works closely with financial institutions discussing, exploring, and examining market trends and key drivers in the evolving digital solutions space with a key focus on mobile, tablet and the future of wearable technology. Prior to moving into the sales organization Mark was Senior Product Marketing Manager for ACI's Digital Banking solutions. He was responsible for developing and executing product launch and go to market activities for the related product lines. Prior to joining ACI in 2012, Mark worked at Greenwich Associates as a Senior Project Director on their Custom Projects team. Mark holds a Bachelor of Arts from Lafayette College.  The future of Fintech and where the digital banking evolution will take us is at the heart of what Mark reads about, researches, discusses, promotes and debates. As a proud card carrying millennial, Mark's primary goal is to bring a fresh yet informed point of view to the discussion. It is truly an exciting time to be in the industry as everything down to the foundation of the financial society is being challenged by innovative individuals and start-ups alike. Mark looks forward to helping companies and banks alike navigate the disruptive environment they are in today towards a successful future.

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