Europeans have introduced an innovative take on fintech and banking. By introducing the idea of open banking, they’ve made the greatest step forward in the world of banks since the arrival of world wide web and digital banking. Open banking has been a huge success for the EU and the United Kingdom, but elsewhere it has been slow to be implemented. So, will the open banking standard catch on elsewhere around the world or is it just something that’s made for the unique European block?
Why is Open Banking Still Not Available Globally?
Whereas Europe has moved forward with open banking and has seen huge success, other economies around the world are trying to modify the European and UK models for their own markets. European Union has created a very unique market situation where all of the countries are very co-dependent as it comes to their finances. So, the open banking concept has not only great value right now, but also promises to realize its amazing potential even more, down the road.
For most of other countries, open banking is much more difficult to realize and implement due to two major reasons. The first reason – the lack of technological know-how and appropriate legislature.
Since Europe is currently the only adopter of open banking (even so, it’s in the early stages), the lack of expert developers and competent experts can slow down the implementation. Everyone needs to learn and understand the conceptual foundation and nuances of implementing it locally before commencing work. The same applies to legislators.
And the second reason is the lack of digitization of the finance sector, in general. The open banking standard only works in places where internet banking is widespread and popular. So, lesser developed countries are not prioritizing such an advancement for right now.
What is the Status of Open Banking Around the World?
As we mentioned, the UK and the EU have strong foundations and working systems for open banking. Both Singapore and Australia have begun significant projects to create functioning infrastructure and are in the early stages of implementing such solutions.
Singapore, India, Japan, Brazil, Mexico, Turkey, and South Africa are all exploring the potential of open banking or have already been introduced with the appropriate legislature for the establishment of open banking practices. However, the realization of such projects can take time, and hence, for now, no single block or country can compete with the advancements made by the European Union and its close neighbor, the United Kingdom in this field.
What is the Open Banking Standard, in General?
The definition can slightly vary from country to country, but for the most part, an open banking standard is a set of rules and regulations, following which, open banking operations must be done. For the EU, it’s the PSD2 along with its SCA, as well as GDPR – key documents, outlining the ins and outs of open banking standard.
Each and every other country that has moved towards implementing such a solution has its own directives or acts which should outline the requirements and rules for market participants.