Fintech Impact

In this 160th episode of Fintech Impact, Jason Pereira, award-winning financial planner, university lecturer, writer, and host interviews Frederik Mennes (OneSpan), John Pitts (Plaid), & Yoseph West (Relay) to discuss the state of Open Banking in the United States! 

Episode Highlights: 

● 0:50 – John Pitts introduces himself and Plaid. 

● 1:32 – Yoseph West introduces himself and Relay. 

● 2:08 – Frederik Mennes introduces himself and OneSpan. 

● 3:22 – What is the state of affairs in the US for Open Banking right now? 

● 5:52 – Frederik addresses the fundamental differences between the US and Europe in their approaches to Open Banking. 

● 7:00 – How has the state of regulations in the US impacted Relay’s growth? 

● 8:30 – What are the incentives and motivations for Plaid’s clients on the bank side? 

● 11:34 – Frederick shares about OneSpan’s client education around security in Open Banking. 

● 13:30 – John explains why he thinks that regulations are not as vital as some might think. 

● 16:47 – What is going right and what needs to be fixed in the US situation? 

● 24:49 – How do US companies regulate the risk of moving to APIs? 

● 27:46 – Is it reasonable to draw a compliance line for customers with a certain value of assets? 

● 29:48 – Jason and Frederick weigh the risk vs. reward of Open Banking for smaller banks. 

● 31:39 – How much pushback does John see from Plaid’s screen scraping guidelines? 

● 36:08 – Where does Yoseph feel constrained in the current system? 

● 41:00 – Everyone shares the one key thing that they believe the US Open Banking system should focus on moving forward. 

3 Key Points 

1. While the US finds itself years ahead of Europe on the practice of Open Banking, it finds itself an equal amount behind Europe on regulations. 

2. Open Banking companies in the US face the challenge of switching over to Application Programming Interfaces (APIs) without risking data and client rights. 

3. Screen scraping, or consumer data extraction for automation of previously-manual actions, is still allowed under PSD2. It has actually been updated in its security measures. 

Tweetable Quotes: 

● “It’s no secret that Europe has been pretty much at the forefront of the Open Banking initiatives around the world through initiatives such as PSD1 and PSD2.” – Jason Pereira 

● “To actually deliver true open banking, the dream that we all think of...I think that’s a dream that will only exist as a result of Challenger or Neobanks.” – Yoseph West

● “At this point, regulation is actually very helpful to create a level playing field for security. Regulation can help to make sure that all the players in the ecosystem...implement the right security technology.” – Frederik Mennes 

● “The key thing that makes the US market special is that it is being driven by consumer demand.” – John Pitts 

Resources Mentioned: 

● Facebook – Jason Pereira’s Facebook 

● LinkedIn – Jason Pereira’s LinkedIn 

● JasonPereira.ca – Sign up for Jason Pereira’s newsletter 

● Woodgate.com – Website for Woodgate Financial 

● Plaid – Website for Plaid 

● OneSpan – Website for OneSpan 

● Relay – Website for Relay