In this article, Deep Labs Chief Strategy and Product Officer, Michael Lynch discusses whether open banking will come to the United States and if banks and credit unions should start planning for it now.
Open banking is currently mandated in the EU, via a European directive. The regulation behind open banking is the second Payment Services Directive (PSD2). Open banking is designed to permit consumers’ data to be used by third party providers and thereby increase the competition and quality of products in the banking, payments, and credit cards space. Other benefits include ways to save consumers money with better interest rates or cash incentives, as well as making it easier to switch accounts, or to permit consumers’ data to be used by third party providers for helpful tools such as creating a dashboard of all their financial accounts.
PSD2’s main goal is to increase commerce, create a consumer-friendly ecosystem, while ensuring that the consumers’ data remains secure in the process.
One continual question is will we see open banking come to the United States under similar regulations? It is only matter of speculation at this point, but it seems thus far in the U.S. that the private sector will trend towards similar capabilities without a regulatory mandate.