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To Regulate Or Not To Regulate – Is That Thy Question?

Open Banking Regulation in USA

Debates are healthy, and as someone who spent a little time during my college years dabbling around the edges of the speech and debate team, I can tell you it’s something that I personally relish. A chance to really talk through the pros and cons of an argument and lay out the bare facts… and then be judged based not only on those facts, but on the presentation and power of persuasion—sign me up!

My wonderful and insightful colleague, Paul “A Brit living in Omaha” McMeekin, recently shared his insights on the opportunity for Open Banking to take root at a state level in the US, but he’s skirted the main issue on this topic – or just assumed it to be fact; a folly many less seasoned debaters have made. The fact is that we need some regulation for Open Banking to take hold, which remains an open question here in the US.

The number 1 ‘pro’ of regulation is uniformity and a ‘call to action.’ The biggest hurdle we face is inaction. But at the end of the day, to reach the potential of open banking utopia, banks are going to have to invest a lot of money. We’re talking billions of dollars; just look at the news on what Nationwide and RBS have recently committed to as part of their transformation plans.

In the parts of the world where PSD2 and Open Banking are mandated, it’s no longer a choice of whether to embark on these projects; it’s necessary to operate efficiently and effectively in the new world of finance. This spend will effectively position those institutions to rapidly take advantage of newer and newer technology as the innovation cycle accelerates, while the financial institutions not undertaking this will inevitably put their legacies at risk.

And the number 1 ‘con’ of regulation? Cost and “what if we’re wrong?” As noted in the primary ‘pro’ above, the cost of re-architecting/platforming a bank is no small task. The cost will be measured in trillions (as an industry) by the time the dust settles… and what if we’re wrong? What if consumers simply don’t want any of these new technology-driven financial tools and payments options? I am hopeful that the latter POV is fading, as early usage for new payment types and alternative payment options flourish globally. However, the incumbents maintain a massive position of strength (as they own a clear majority of deposit accounts and financial transactions today).

I have stood by my view that market competition in the US is strong enough to move the ball forward on Open Banking, and we have seen a thaw in terms of creating partnerships, which even five years ago many of us would have said were never going to happen (Goldman Sachs and Acorn, Suntrust and Kabbage, to name a couple).

However, if we’re going to see Open Banking or digital banking ecosystems reach their full potential, it’s going to have to be less focused on driving revenue in current business models, and more on attracting data flows due to new value propositions – something that will inevitably lead to those new revenue streams that may make today’s revenues look like drips from a faucet.

Now that’s how you debate!


Mark Ranta will join top payments executives at the Leadership Loft at Money20/20 USA, for a session titled: “Return of the Planet of the APIs: The New Payments Ecosystem,” 4:00 – 4:40pm on Tuesday, October 23. In this session, experts will discuss how traditional boundaries that once defined the payments landscape have been removed with APIs.

Meet ACI at Money 20/20 at Veronese 2502, October 21-24. For more information, visit ACI at Money 20/20.