2020 was a whirlwind for us all. Digitalization sped up almost overnight as our world was forced to deal with remote living and working becoming the norm. These changes impacted many aspects of our lives, including the way we use money. Now that we’re halfway through 2021, let’s look back to some of the best articles of 2020 to see what lessons we learned.

How Open Banking Will Revolutionize Retail Banking

Open banking will open new doors due to the changing relationship between consumers and financial institutions. To avoid any confusion, it makes sense to first clarify what open banking actually is:

“Open banking is defined as the sharing and leveraging of customer-permissioned data by banks with third party developers and firms to build applications and services, including for example those that provide real-time payments, greater financial transparency options for account holders, marketing and cross-selling opportunities.”

Who Has Adopted Open Banking So Far?

The UK was the first European country to adopt the open banking model in 2018, when they required the nine largest banks in the UK (HSBC, Barclays, RBS, Santander, Bank of Ireland, Allied Irish Bank, Danske Bank, Lloyds and Nationwide) to allow licensed start-ups access to customer banking data. Inspired by the European and UK open banking model, several other countries, like Australia and Nigeria, have launched open banking initiatives of their own.

Open Banking Will Change the Financial Sector

So how will this change the banking world as we currently know it? Open banking creates greater competition, as neo-banks and other fintech companies can now enter areas historically reserved for traditional banks. Customers will now have access to greater financial possibilities and transparency from a wide-range of financial institutions, which means banks no longer have the power they used to.

The Era of Tailor Made Banking

This will lead to an era of tailor made banking products—no longer will someone be a customer of the bank, but the bank will be the customer of the individual. In the new era of banking the key drivers will be: regulation, technology trends, customer demands, and competition.

Open Banking Opens New Doors

In a world which has historically given banks incredible power and control, the open banking model allows for some much-needed change and transparency to occur. Let’s just hope that open banking will encourage our financial data to be shared for the benefit of the customer, rather than promote greater financial control and power for institutions.

Read the full article here.

The digital money revolution is already here, and banks and credit card companies have reason to be nervous.

Hailing in the new era of banking, let’s take a look at our next article. Though there has been a great amount of importance placed on Bitcoin—largely due to it being the first major crypto-currency and a key player in starting the blockchain revolution, things are likely to change—and quickly. With incredible technological advancements in the last years, many more competitors will emerge in the new digital money and digital capital world.

The Era of Digital Capital is Here

Though the future is not yet clear, important changes are already taking place in regards to capital and its digitalization. What does this mean? Unlike traditional capital, digital capital can be used instantly, as well as moved and stored online in a secure manner without any involvement from banks, credit card companies or other financial institutions. “While these are early days of this revolution, the contours and trajectory are clear and unstoppable. Capital as we know it is being reinvented.”

The Future of Money is About Digital Transformation

When it comes to the Future of Money, digital transformation is taking place on a mass scale. Digital assets are “smart”, so when you send money, you’ll be able to program it with specific functions—i.e. so it only works at certain retailers. This is very appealing for many groups, including parents sending money to their kinds—even from a distance they will be able to have some control that their kids are buying food instead of cannabis.

How We Use Money is Changing

Incredible advancements have already taken place regarding how we as a society use money—within the next decade, we are likely to witness a complete transformation. Private companies like Facebook have even released their own cryptocurrencies (i.e. Libra); given the number of users and therefore data in their possession, Facebook could easily become one of the largest financial institutions worldwide.

Other companies like Alphabet or Amazon are thinking along the same lines, with their own corporate currencies set to be released.

Is the Future of Money Digital Currencies?

While policy makers are hesitant to usher in the era of complete digital capital, they can’t resist for much longer. In August 2019 central banks from around the globe met to discuss the largest change in the global financial system since the 1944 Bretton Woods agreement.

What if currencies were replaced with a new digital global currency, backed major currencies from around the world? Banks worldwide are now looking into how this would work in reality--regardless of what happens, it’s clear that the next decade will bear witness to some of the greatest transformations the banking world has ever seen.

Read the full article here.

Big Tech in Finance: A Deep Dive Into the Future of Fintech

Our next article covers how big tech is pushing into the world of finance. The growing power of Fintech has turned the traditional world of banking upside down: It’s made banking more inclusive, increased economic growth globally, and brought forth new technologies like digital payments, P2P lending, insurance, investment management, and even more.

The link between technology and financial institutions is only strengthening, as the need for new technologies and a solid infrastructure has increased considerably in recent years. As it stands, “Financial institutions have invested more than $27 billion in digital innovation and fintech since 2015, a KPMG report indicates.”

Silicon Valley Giants Love FinTech

Silicon Valley giants like Google, Facebook, Apple and Amazon have already made quite the impression in FinTech world with the introduction of digital payments (Google Pay, Facebook Pay, Apple Pay and Amazon Pay). It doesn’t stop there, Apple has already created its own credit card, Google has teamed up with Citigroup to offer a checking account, and Amazon has released a wide range of financial offerings.

Financial institutions aren’t going down without a fight though: “Big Tech spent 2019 acquiring AI startups, banks, insurance leaders and financial institutions responded by doubling down on digital initiatives, expanding the scope of in-house technology to earn consumer trust.”

Why Banks are Afraid of Big Tech

Even so, it’s clear big tech poses a real risk for financial institutions, but that doesn’t mean it’s the end for traditional banks. FinTech allows for digital transformation to actually strengthen the connection between tech companies, banks and insurance providers, rather than weaken it. Next to this, Big Tech can’t yet destroy the banking world due to major regulatory and data privacy challenges—who’s to say this won’t change in the future though.

Read the full article here.

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