Is There Really Money in Space?

With open banking, is technology creating a decentralized future of banking? Smartphone apps like Mint and Personal Capital paved the way for customers to access the entirety of their financial data in one place, but now, major banks are beginning to enter the open banking game. What are the repercussions for traditional banking institutions? What are the benefits and risks for consumers? And is this the beginning of the end of brick and mortar bank branches?


Featured Guests

Episode Highlights

  • 1:55 – Panelist Introductions
  • 2:55 – What is Open Banking?
  • 9:05 – The current state of Open Banking
  • 19:30 – Is this the end of traditional banking?
  • 25:33 – Questions from the audience
    • What is the single most important problem being solved by open banking and who’s problem is it?
    • Will open banking create a larger cybersecurity threat, or reduce the risk?
    • Is ransomware a concern?
    • Why should I hand over my personal data to these FinTech companies without any financial incentive?
  • 33:05 – The biggest threat to Open Banking
  • 36:05 – Dean Jarley’s final thoughts


Episode Transcription


Paul Jarley:                         George Jetson, a man created in the 1960s to depict what life would be like in 2060. He lives in a city in the clouds. He drives a flying car that neatly folds up into a briefcase that he can carry into work. When he drops his kids off at school, he releases them in a pod that gently guides them to their destination. But when Jane, his wife, wants to go shopping, he tries to give her some cash. She takes his whole wallet. Cash, really? It’s 2065 and George is still using cash. Maybe it’s because nobody thought banks would innovate, or maybe it’s just George’s way of trying to control Jane’s spending. Either way, it seems woefully out of date. George, my friend, do we have some stuff solutions for you. This show is all about separating hype from fundamental change. I’m Paul Jarley, Dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, is this really a thing? On to our show.

Paul Jarley:                         Today’s podcast come straight from our Dean’s Advisory Board meeting where we spent the afternoon talking about FinTech. The College of Business has partnered with the College of Engineering and Computer Science to launch a master’s program in financial technology. Many of our board members have a keen interest in this topic. So we brought together a panel to talk about one of the many innovations in this sector, open banking. Today we’re going to talk a little bit about a subject that I don’t know very much about. I stumbled upon this a few weeks ago, which is often how we come up with ideas for the podcast, called open banking. And I have three people here who are going to help us understand what open banking is and whether or not it’s going to be a thing going forward. So I’m going to ask each of our panelists to start off just by introducing themselves, and I’ll start with Christo. Christo?

Christo Pirinsky:               My name is Christo Pirinsky and I am a professor at the finance department, and I’m also the co-director of the FinTech program that we just launched.

Paul Jarley:                         Sumit?

Sumit Jha:                           Yeah, I’m Sumit Jha. I am professor in the computer science department, and co-director of the FinTech program from computer science, and my area of research is artificial intelligence, and we work on a variety of problems funded by DARPA, National Science Foundation, and a variety of other agencies that do not want to be named.

Paul Jarley:                         Charlie?

Charlie Lai:                          Hi, I’m Charlie Lai, I am the CIO of Fairwinds Credit Union. I’m responsible for all technology and innovation for the credit union and ideally staying ahead of trends like open banking.

Paul Jarley:                         And Fairwinds has been a very strong supporter of our FinTech program. They’ve contributed a million dollars towards a professorship in FinTech and so we’re happy to have you all here. All right, well let’s start at the beginning. What the heck is open banking?

Charlie Lai:                          Actually, the year 1985 is apropos for this conversation because I think that’s the last time that a bank has created something that’s truly innovated. Maybe the debit card. It’s probably inaccurate, but that’s a good starter for a conversation around open banking. From our perspective, the conversation starts with level setting with what the definition of closed banking is. Banking as an industry hasn’t really evolved out of a hundred year old, 200 year old model, where we have products and services that we think are important that you must have. And we make you come to us for how we’re going to deliver them to you, and you must pay for them, and you have to like them, and you have to tell your friends that they’re great so that they get them too.

Charlie Lai:                          That’s changing pretty quickly, what we all have seen over the last 10, 15 years with the evolution of Apple, Facebook, Google, the power of technology has democratized the economy, much less financial services. And through technology, you actually can deliver financial services that are meaningful to the customer in a way that’s much different than what banks deliver today. So, we see this as kind of a tremendous door opening to competition and evolving to something that’s ultimately better for our customer.

Paul Jarley:                         Gentlemen, either of you want to weigh in?

Christo Pirinsky:               Op banking also more specifically refers to the idea of sharing of information, personal information of individuals across different… Information from different institutions. So, obviously data is very variable because there is information in it. If we observe how people shop, maybe we can advise them better about new products in the marketplace. If we observe how they spend money, or how they save, maybe we can advise them better to make better investment or consumption decisions. Unfortunately most of the data and information that people leave in the space out there, it’s very dispersed. It’s not concentrated. You have a credit card that you use and there is something variable in your statements that tell something about you.

Christo Pirinsky:               You have a bank account, you shop in Target, but this information just spread all over the place, and value could be created if this information is somehow concentrated, and if people are able to aggregate and consolidate all of the information that they leave here and there, and use it for data analysis. So that we can learn something better about them. And my understanding is that this is behind kind of the idea about open banking, how to create… It’s more like a platform, similar to the internet, and refers to the idea of enabling people, individuals, somehow to aggregate and consolidate the information trays that they leave in the world out there so that it could be used for better intelligence.

Paul Jarley:                         I’m still having trouble getting my head around this, if I might. Why do I care if my data is concentrated? Go ahead, yeah, yeah.

Sumit Jha:                           Why open banking now? Why not in 1985?

Paul Jarley:                         Yeah, what’s pushing for this? I mean-

Sumit Jha:                           Open banking is really now an opportunity. For the first time you have the internet, which is allowing you to move data very fast. You have mobile phones, which are allowing an average consumer to have access to this internet, and to move data around. So open banking is really providing us an opportunity to use data as the new oil. So now data is now the source of riches, and so now people have the power to use this data to actually create value from it. So I have been a user for an open banking platform for a couple of years now, and it is amazing to see the kind of data it had mined from multiple bank accounts, about you.

Sumit Jha:                           It can tell you that you are paying for the streaming service that you are never using, and I had been paying for the service for quite some time. So that level of data analysis is only possible when you have these multiple accounts coming in one place, going through very rich data aggregates, which is happening right now for two reasons. One, the internet and other massively parallel computing. So rise of GPUs, and neural networks, and AI is what is providing these companies the power to analyze your data better than in 1985.

Paul Jarley:                         Okay. Ultimately though, this is going to allow me the consumer to make better choices about the financial products that I’m participating in? Is that where this is at? Because who’s pushing for this?

Charlie Lai:                          Yeah, and it really is stemming from this sense of competition, enhancing competition, and ultimately doing something better for the consumer relative to what’s being provided by traditional financial institutions today. Today banks offer products and services, we create innovation, we create things that are really good for us, and sometimes they’re good for the customer. The concept of this, making data available more democratically, now opens up a level of transparency that you can do some really interesting use cases, for example.

Charlie Lai:                          So, what if I had a view of all of my spending patterns, but also behaviors, things like I pay my rent on time, I go to school, and I get good grades, and that becomes potentially a proxy for a different credit scoring model that I’m using in lieu of traditional credit scoring models, and it’s based on an aggregation. That’s just one use case. The beauty of… I think if anybody looks at open banking on the surface, get it. But if you start to look at the use cases that you could potentially solve by opening up, democratizing, and also protecting the data, and then applying some innovation to that, then you start to get some really interesting power.

Paul Jarley:                         Can I get you to work through steps here that will help me and maybe my listeners understand what’s really going on here. If I get this right, I can give permission to third parties to have access to my accounts, including maybe my bank account, that they would then be able to analyze my spending patterns, my investment patterns, my savings patterns, and provide me with either financial advice, or with opportunities to save money, or to purchase new products that are of interest to me. Is that right?

Charlie Lai:                          That’s accurate. And that’s one use case.

Paul Jarley:                         Okay. But if only I do that, that’s not very helpful, I suspect, right? So you need millions of people to do this. Now I’m going to tell you the story of my father. My father is 83, okay? Depression-era baby. And every month, the social security administration deposits a check in his account, and he walks down and withdraws all the money. He doesn’t have a lot of faith in that system, is that a fair statement to make? So why are millions of people doing this, or are millions of people doing this in a way that makes this effective?

Sumit Jha:                           So if we look at what has been going on in the London and Europe, they have-

Paul Jarley:                         They’re ahead of us in regulatory.

Sumit Jha:                           The regulatory mechanism has forced them to develop IT infrastructure, which is different from their traditional IT infrastructure. With the idea that these third party companies only have access to data, not actually to moving money from the bank accounts. And these third party providers have access to what is called a scale-out systems. So even if millions of people enroll in this program, the servers are not going to crash.

Paul Jarley:                         Yeah, let me make sure I heard something right here. Charlie, I’m glad you’re participating here. I’m being devil’s advocate, a little bad, right? But banks didn’t push for open banking.

Charlie Lai:                          No, actually, if given their preference, this is the furthest thing from what banks want.

Paul Jarley:                         Point number one. Point number two, I’m not sure consumers did. I think governments did. Is that fair to say?

Charlie Lai:                          That’s fair to say.

Christo Pirinsky:               But consumers influence the government through the consumer protection agencies and advocacy groups, in a way. So I completely agree. So incumbents, it is large banks they are not quite interested in shaking, changing the space quite a bit. I think the two major forces driving it are startup firms and on the supply side, people see new products which could be helpful, they could create value, and they start working on them. And the other side is the consumers possibly through the government, advocating for certain types of regulations and oversight.

Paul Jarley:                         Because the banks have the scale by which to make this feasible though, right? Because that’s where the deposits are and where all the customers are.

Charlie Lai:                          The largest banks do.

Paul Jarley:                         Right? Yeah, yeah.

Charlie Lai:                          And kind of the devil’s advocate position there is, besides consumers pushing for that, why would government push for this? A view that I have is they look at the banking model that exists today and they’re looking a little further out, and they see problems ahead. They see the consolidation that’s happening in the industry, and they see this constant battle around the edges of other entities trying to get into similar and like businesses, and they’re kind of… This concept of open banking, and opening the competition forces the industry to innovate itself. And it also raises the capabilities of your mid-size, small institutions to compete potentially at the same scale as some of the largest institutions without the largest institutions just using that scale to really dominate the entire marketplace. So, it may not be an accurate perspective, but it’s an interesting perspective.

Paul Jarley:                         In the United States, as I understand it, you’re not forced to play in this [crosstalk 00:13:21]. Correct?

Charlie Lai:                          We’re not. And that’s the interesting take is, so with the advances in Europe and U.K., and in Asia and Australia, our perspective is that your largest financial institutions are paying attention and if they’re not already doing that in those markets, they’re learning lessons that they’re getting ready to bring to the United States with the intent of protecting their market share, protecting their revenue streams, and what that does is that further compresses any of the mid-size, small, regional institutions who aren’t paying attention, and that just will weaken them further.

Christo Pirinsky:               And it’s interesting that their cultural differences across the world actually shaped this process differently. And the way the data space changes is different in Europe and different in United States and different from Singapore, for example. Because the local values and cultures are different. Europeans, they’re very friendly towards regulations, so that’s why most of the changes there happened from top down. U.S., not so much, and the culture here is such, people are pro-market, and very unfriendly towards regulation. As a result, all of this innovation that happens, takes place in U.S. It is not top down, it’s more like bottom up. It’s driven by startup companies, and entrepreneurs, and they exercise certain pressure, and not as much from the consumer side I would argue and through the regulatory side, as it is in Europe. So, Europe is much more friendly.

Sumit Jha:                           So as a consumer, when a bank does not play very well with a FinTech firm, and I don’t have the data need to do what I need to do, what I did was just stop depositing my money into that bank account, because I have no transparent access to that system. So I think that consumers have a power and they have a desire to use their money in a more visible manner. Those institutions who do not start adopting this, run the risk of losing their consumers, particularly the younger people, particularly people who spend their lifetime on a cell phone, and people who are on Instagram for whom privacy is probably not the same thing that it used to be 50 years ago.

Paul Jarley:                         Or for my dad, right?

Sumit Jha:                           Yeah.

Paul Jarley:                         What’s your favorite app in this space, so far? Do you have one?

Charlie Lai:                          Not a single one, but there’s a lot of innovation happening. Some interesting examples illustrate the power of this. There was a video that it’s been around for a few years, it’s called How China’s Changing the Internet, and it showcases some of the capabilities within somebody’s day in the life of using WeChat. And the payment illustration, or the banking illustration is in this person’s everyday life. They’re going to lunch, and they’re paying for lunch, and they’re socializing, and they’re doing normal daily tasks. I think one of the things they do is get their dog washed and then they pay for that, but they do all of this activity within the app, and what it illustrates for us is that we have to be cognizant of where consumers want to be, and how they define convenience, and don’t make them come to us for the things that they want to do every day.

Charlie Lai:                          If they have to do that, once they have a better alternative they’re immediately going to choose that. That to me is what open banking embodies. If we can, through the technology, empower that and create new experiences, then we’ve got a different future and more relevance.

Paul Jarley:                         Sumit, you got a favorite? Got a favorite app?

Sumit Jha:                           I have one, I better not name it.

Paul Jarley:                         What does it do? Can you tell me what it does?

Sumit Jha:                           So it has all information about my bank accounts, my credit cards, if you have a car loan or a house loan, that information is in there, and it takes my fingerprint and then immediately it goes to all the accounts, gets the data at that point of time, and it displays the summary for me to watch. So it takes me like half a minute to find out how I am doing. And then, if I need to make a transaction, it has the power to make those transactions. I don’t use it for security purposes, I prefer to make those transactions myself. But in terms of just observing the data, it is very helpful. It sometimes provides useful insights. It says that you spend so much money on flights or on [inaudible 00:17:52], or something like that. So, it has a lot of AI built into it to analyze my behavior and say what I should be doing.

Paul Jarley:                         Christo, you got one?

Christo Pirinsky:               I personally don’t use one yet. I’m considering. Mint is one of the early players. Well they do personal financial advice, whatever you just described. So they could link a couple of different accounts, and then they follow your activities, and they alert you of behavior that could be potentially suboptimal. So they literally give you an advice. You’re probably-

Paul Jarley:                         So what’ll make you do it or not do it? You said you’re considering it.

Christo Pirinsky:               That’s a good question. So, I’m not a first adopter, so I’m not somebody who jumps, but I’m not the latest adopter either. So, I’m kind of very interested in the technology and I just maybe need to see the experiences of some of my friends and people I know and collect a little bit more information about it. And then I’m still not sure about the benefit that I’ll get relative to the cost that it will take to set it up-

Paul Jarley:                         Spoken like a true economist. Keep going.

Christo Pirinsky:               But I’m intrigued by the technology. I think that has definitely a potential, and I can see how it could evolve very quickly and at some point soon, probably I’ll jump and participate in some of those.

Paul Jarley:                         Are we seeing the end of traditional banking as we know it?

Charlie Lai:                          I think so. An interesting analogy that I’ll add onto the favorite app isn’t in the banking industry, it’s about Uber. And so think 15 years ago or 20 years ago, if you’re in any major metropolitan city and you get off your flight and you go out to the street and your options are really hoping that the time of day, right? There’s a taxi driving around. And if you hail them, you’re hoping that you catch their attention. And if you ask anybody 15 or 20 years ago, what type of innovation would you imagine for that industry besides more taxis, or longer arms, or something like that, you’d be hard pressed to identify how you would actually innovate the space. So the idea behind not really just open banking but technology innovation powered by FinTech is really thinking about creative ways to find unmet needs or unserved needs.

Charlie Lai:                          And if you think about Uber, they’re not a transportation company, they’re a data company. And what they’re really just doing is connecting a need through data to a solution. And they’ve evolved into Uber Eats and whatever they’re imagining to do next. And it’s really about solving for an unmet need. I see that same parallel for open banking through the FinTech industry as the creativity explores use cases for consumers that can be solved through technology. There’s things we can’t imagine today that will resonate, but they’ll have that same impact as as Uber is doing.

Paul Jarley:                         So will banks eventually turn around and buy some of these FinTech companies and incorporate them into their structures? Is that a viable path forward? I mean, if I’m a bank, I’m a little worried about what I’m going to be left with. I mean, one way that I can think about this is that all these FinTech companies are going to pick off all my high-margin services and drive those values to zero and I’m going to be left with the part of the business that no one wants.

Sumit Jha:                           So we should try to answer that question with another question. Did IBM buy Microsoft? So, software has value. It might seem that from a very traditional perspective, that software and software systems or data systems have no intrinsic, or have limited intrinsic value but maybe times are changing, and these systems have intrinsic value and they may replace some of the traditional systems.

Christo Pirinsky:               And also, the technology makes the pie bigger, so banks will actually get a piece of the pie so they could actually profit from it. And I’ll just give you examples. For example, one of the major applications of this big data analytics, it’s actually the ability to extend credit to a lot of unbanked people who currently actually are outside of the banking system simply because the system is not capable to screen them well and evaluate the risk level. But the new-

Paul Jarley:                         But they’re going to be open bankers, is that what you’re telling me?

Christo Pirinsky:               But the open banking actually allows for people to screen them, to screen people much better. And even somebody who’s virtually outside of the major financial space, they still could leave actually a lot of information based on where they show what they do, and this information would allow actually someone to evaluate their credit worthiness and risk level much better and extend them credit. So there be a lot of new people actually joining the financial system as a result of that. The pie gets bigger, banks could actually get some of it, so they could be actually interested in maybe supporting some of these.

Paul Jarley:                         What do you see as government’s role in all of this? It seems a bit like the wild, wild West to me. We got a bunch of people out there running around developing a bunch of apps that are going to connect to my bank account or promise to connect to my bank account. I need to trust all of them, or at least some of them. I’m not sure I know what the definition of a bank is anymore. What’s the role here?

Charlie Lai:                          Well, in the European markets, the role of government with regulation, is to drive standards, drive standard data practices, standardized security measures. Third parties that are going to connect to the APIs are vetted. That structure adds safety and soundness to the ecosystem.

Paul Jarley:                         We’re regulating the highway here, right? That’s the word. Yeah. Any others? Your time at the SEC, Christo, give you any insight?

Christo Pirinsky:               Yeah, it gives me, at least the way I see it, I mean, I think U.S., I mean, this could develop and could go a long way without severe government intervention, but one place where actually this government could step in and be very helpful is in order to standardize the information because a lot of different banks, institutions, they could simply keep this data in different formats, and which would make it very difficult to integrate and use-

Paul Jarley:                         They’re being passive-aggressive about it? Is that what you’re suggesting?

Christo Pirinsky:               Maybe imposing some type of standards. I think that’s one of the biggest benefits of the Securities and Exchange Commission is exactly standardizing disclosures and making companies use the same language. I think this could be very important in the data space because just to make sure that everybody is recording and keeping data using the same formats, the same kind of definitions. This would make it much easier for anybody to use it in, and it’s more difficult for companies to agree on that much easier if we have some type of regulatory body. It could be self-regulatory agency, maybe it doesn’t need to be a government agency, but I see this definitely could add a lot of value.

Paul Jarley:                         We got a lot of smart people in the audience today. Anybody got any questions on this? Yeah, George?

Speaker 2:                           So the question was what’s the single most problem being solved by open banking and who’s problem is it?

Charlie Lai:                          Well, on the surface it’s the consumer, is the source point for the initial problem, and it’s really about increasing choice, increasing convenience just by exposing other avenues for them to control through their access to their data, how they’re provided financial services. More interestingly, the other entities are the banks themselves, kind of untouched the industry within an open competition market, the bigger guys are going to get bigger and they’re going to get stronger. Their scale that enables so much. The smaller to mid- size financial institutions will have a tougher time competing. And what that really means is less choice too.

Speaker 2:                           So the question has to do with cybersecurity and financial transactions and whether it will become bigger or be reduced by this.

Sumit Jha:                           The first time that customers lose money, or even lose their data, which has privacy issues there will be a big backlash. And I think, since there are multiple number of players, multiple types of apps, it is more likely to happen than not. And then there will be a need for some sort of either a standardization, or some sort of a body that comes and says, “Well, these are the good guys, these are the sort of all right guys, and these are perhaps people you should not trust. So cyber security is going to be a big challenge, and not just from individual players. It could be more much more serious. Well organized, nation-state type of actions for cyber security.

Paul Jarley:                         Is it crazy for me to think about the rogue app that’s put on merely to steal the money out of my bank account?

Sumit Jha:                           No, it is not crazy to think about a rogue app that steals your data because I think that is feasible, once you install an app, give it the permissions. If you choose to install the app, it is possible to do this today, but an app that actually moves money out of your account is much harder because all the banks have hardened their cybersecurity parameters. You have to have a one time password, and other mechanisms. It can probably be duped into doing this, but that will require-

Paul Jarley:                         That’s what I’m thinking, yeah, actually that is what I’m thinking.

Sumit Jha:                           But that would require some collaboration from our part.

Paul Jarley:                         Or the North Koreans maybe have their own app? I don’t know.

Sumit Jha:                           Stealing data is definitely possible. That I think is very easily done. Once you trust a system, it has your data. So if you choose to trust it, it will have your data.

Paul Jarley:                         The question of ransomware on your FinTech app.

Sumit Jha:                           So ransomware is also going to be a serious problem, depending upon what is there in the data, of course you’d be made to pay for it, or to pay for it not to be released.

Paul Jarley:                         What about the idea if these fin companies are benefiting from getting my data, why don’t they buy it from me? It’s mine. Why should I just give it to them?

Sumit Jha:                           That’s a very interesting view. And the same view also holds about social networks like Facebook, or Google+, or Instagram. We are data creators for giving data to these companies for free and they are benefiting from it. There are arguments to be made on both sides. There is some value in the argument.

Paul Jarley:                         So I think, hasn’t Europe gone farther in that?

Christo Pirinsky:               They’ve gone farther. But my immediate response in reaction to it is that your data has value zero because-

Paul Jarley:                         By itself.

Christo Pirinsky:               By itself. Your data has only value if it’s put in a pool of 1 million other people so you can actually see [crosstalk 00:29:21] exactly. I mean even your blood pressure, your cholesterol, they’re just numbers. They have no meaning if you don’t compare them to a large group of people. So that’s why it’s hard to… How much would you want, will you charge for your data? It’s hard to vet it. It’s a kind of very interesting [crosstalk 00:29:36]. It’s a very interesting phenomenon.

Paul Jarley:                         Give it to a data exchange, they can sell it in bulk and I get cut.

Sumit Jha:                           You know, in blockchain, it’s not very hard to imagine that your data can be coupled with millions of other data points, even in a very anonymized manner and can create value for you. I think that’s going to happen sooner than later.

Christo Pirinsky:               Europe is moving in this direction. It gives you a property rights, in a way. It gives you more rights over your data. So if you would like to take it out of a bank, put it somewhere else, but they’re not monetizing that right. So there’s no market in which you can actually sell your data to the largest bidder or something like that.

Paul Jarley:                         So I’m going to get more Google AdWords now every time I used the word bank in an email?

Sumit Jha:                           So if you don’t want to do that, you just need to change what browser you use. Install the Tor browser and be anonymous, and incognito, be behind an anonymous proxy, and I know some computer scientists who do that, because they just want to be a private person.

Paul Jarley:                         Because these apps, right, will have information to some really interesting information on you that companies would really want to purchase. So the role of big tech and all of this. Yeah, well Facebook’s been talking about creating its own crypto currency, for example. Back when I was in graduate school, I taught in a maximum security federal prison. And one of the ways that people got into it is they created their own currency. The government really, really frowned on that, as it turned out. But what about that?

Christo Pirinsky:               I think they’re very good questions. And this is something which makes U.S. very unique and different from Europe is big tech. So, as much as the government might not be as involved in this process in U.S., big technology firms are, and they actually serve in a way perhaps similar role. And if it, as you mentioned, like Apple was technically in a war with Visa and MasterCard over Apple Pay, and they were able to actually push it forward. And so in some sense big tech here because it’s so big and so powerful, it’s almost serves the role of a government in a way, right? So there again, it is a powerful entity which plays with banks in this field, and Europe doesn’t have that. And I think it will continue to be very important.

Christo Pirinsky:               In Amazon simply because we talk about open banking, but it’s not just about banking. I mean, Amazon probably has more information about all of us than any bank in the world. So it’s about hospitals, and it’s about health care, and online, and Facebook, and social media. So they are actually in this space. They are very important, the big tech companies, and they would push a lot of innovation in this.

Christo Pirinsky:               Yeah and most of our big tech companies are very big into AI, and not all AI is created equal. So some of this AI is going to be much more intelligent than others. So they would know more about you than say a startup that has just made its own AI. And then someone was giving me a problem that I want to find out if my consumer is going to leave my bank. If you are a tech company and you have access to their social network and you know four of his friends have already left this bank, you know that this person is more likely to leave this bank than from his financial data.

Paul Jarley:                         What’s going to make or break the open banking initiative? What’s the biggest threat faces to just go down in flames?

Charlie Lai:                          In the U.S., lack of regulation.

Paul Jarley:                         Tell me more about that.

Charlie Lai:                          I think that’s the power for this to thrive here. If that doesn’t happen, then there’s really no motivation for the industry to embrace a standard that’s adopted by really everybody. I think the biggest entities will pursue this, and they’ll innovate for their own benefit, for their own objectives, and that really stifles a lot of the spirit of competition, what’s behind the sense of open banking.

Sumit Jha:                           So you do not really need to have standards in place to enable open banking. It is harder to do it without standards, but it’s not impossible to do it without standards. There’s real demand from people, and people leave their banks because the banks are not helping the [inaudible 00:34:04], show them what they want to see. Then even without regulations there could be some push in that direction.

Paul Jarley:                         Time to make a bottom line assessment, each of you. Is open banking really a thing, or is it a passing fad? Christo?

Christo Pirinsky:               It is. I’m positive on that. I would bet on open banking, and I think it’s going to go beyond banking. So it would be perhaps expand in other areas, in other fields, and that would be my evaluation. And I agree that, regulation, there could be a lot of obstacles, but there is a potential that creates a lot of value, there is a lot of money on the table. Usually people find ways to to extract it. And there would be some type of intervention and collaboration may perhaps, that would enable this to happen.

Paul Jarley:                         Sumit?

Sumit Jha:                           I think by the end of next five years, more data requests will originate on third party open banking platforms than from the websites, or apps of individual banks.

Paul Jarley:                         Yeah, that’s a thing. Charlie?

Charlie Lai:                          I think it’s a thing, and we’re certainly trying not to play defense in our industry with our position. One of our initiatives that we’re going to be focusing on the next couple of years is really around how to create banking as a platform. One of the first ways is for us to produce and publish our own APIs with the intent of exposing that for intent development.

Paul Jarley:                         Here’s how I think whether it’s going to be a thing or not for me personally. I have two kids in college. I want an app that when they use their credit or debit card at three in the morning at a bar, it automatically sends a message from me that says, “Go home. Nothing good happens at three o’clock in the morning. You have an exam tomorrow.” With that, thank you all.

Paul Jarley:                         George Jetson might very well want one of those same apps to monitor household spending. He’s likely to get one along with a lot of products that will help him understand his own finances better than he knows himself. My guess is that marketers, even in 2065, will covet this information, and crooks will be scheming to get into George’s accounts. Keeping both groups out might be the ultimate key to success. What do you think? Check us out online, and share your thoughts at You can also find extended interviews with our guests and notes from the show. Special thanks to my producer, Josh Miranda, and the whole team at the Office of Outreach and Engagement here at the UCF College of Business. And thank you for listening. Until next time, charge on.

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