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Regulation continues to shape bank client relationships
Implications of new regulations and emergence of digital-only players were hot button issues discussed this year at the Asian Banker Future of Finance ‘Global Transactions Re-invented’ track

October 17, 2018 | Siddharth Chandani
  • Open banking is changing the dynamics of the payment space and API is the real big fundamental change , not only in terms of technology approach but in terms of mindset that is encouraging institutions to form new ecosystems together
  • API themselves will open up the value chain for banks exposing them to both greater competition and collaboration to drive innovation
  • identification of potential technology partners and leveraging the strength of fintech innovators, digital service providers and even banks, emerged as strong practices to address specific customer pain points

  • For the past decade or two, transaction banks competed for large corporate businesses through cost-competitive plain vanilla services to clients. The model worked brilliantly for banks as it beefed up and drove revenues from fee-based activities. The fallout of the financial crisis saw regulators re-writing rules for managing liquidity risks more prudently, driving corporates to become more aware of counterparty risks linked to banks. Since then, transaction banking has been reshaped by powerful forces of dramatic disruption- one driven by a more selective and relationship-centric approach, increased regulatory scrutiny and above all the emergence of non-bank service providers into traditional business lines of cash management, payments and trade capital related services.

    In between the changing picture, the regulation that has the potential to forever alter the DNA between bank-client relationships is the revised Payment Services Directive or PSD2. PSD2 mandates banks to grant access of their customer data to third parties/payment service providers (PSPs) across sectors in making payments and undertaking account aggregation services. ...

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    Keywords: Open Banking, API, Technology, Fintech, PSD2, SWIFT, Blockchain, Cross-border