Access to accounts: Why banks should embrace an open future

Abstract

This paper provides a fresh perspective on the recent access to accounts initiative proposed by the European Commission. There is a history of success of open versus closed systems (eg IBM, Telecoms), and it is now the banks’ turn to open up. As it is better to disrupt oneself rather than letting others do the disrupting, the author proposes an open standard interface for controlled payment services: CAPS (controlled access to payment services). The recent PSD2 regulation proposal provides some of the necessary prerequisites of such an approach, but many questions remain to be answered, and severe changes need to be made if the success of other industries is to be replicated here. Open access to bank accounts has the potential to lead to an explosion of (potentially disruptive) innovation, competition and new services. New revenue streams will evolve, and the banks themselves could even be one of the main beneficiaries of this dynamic development. Yet banks need to position themselves proactively in this new environment. The access to accounts will be a reality in the not too distant future — the regulator will enforce this (although he still has to set some boundary conditions for success) — so banks should now prepare to shape this business opportunity to their advantage. This can lead to a situation where banks, payment service providers, merchants and customers are markedly better off than today.