Lender sees open finance driving new wave in financial innovation
eXECUTIVES of Union Bank of the Philippines (Unionbank) announced that the Aboitiz-led lender will be “pushing aggressively” to promote open banking and open finance, which they expect would “revolutionize” banking and financial services that will serve as “a catalyst for the new wave in financial innovation.”
In her presentation during a forum organized by the lender, Unionbank Fintech Business Group Head erika Dizon-go explained that open banking and open finance may differ slightly from each other: the former promotes data sharing on banking services while the latter promotes data and capability sharing across the financial sector. nonetheless, she said the goal is the same, which is the creation of an open ecosystem.
According to Dizon-go, an open ecosystem provides numerous benefits, including seamless data access and sharing, more opportunities for cooperation and collaboration, and most importantly, “unprecedented customer-centricity.” She added this will lead the way to completely change the way people see banking and finance.
Dizon-go cited as example that open finance can inspire service providers to innovate and create new revenue streams. She added that open finance can promote increased transparency and operational efficiency for businesses. For customers, Dizon-go said open finance can help them develop better personalization and, in turn, “more meaningful experiences.”
She said there are several pillars supporting open banking, including regulatory push for frameworks built on principles of consent, interoperability and collaboration. Another pillar, Dizon-go said, is formed by “the heightened expectations coming from the digital and modern social experiences that are redefining banking and finance.”
The two other pillars she identified are: competition, especially with the emergence of non-traditional players; and, infrastructure, which is increasingly becoming more reliant on application programming interfaces.
“All of these factors are coming in to play and have triggered the open banking and open finance movement and the beginning of the unbundling of the traditional banking models,”
Dizon-go said.
Customer consent
AT the core of open banking is customer consent where end users can have the choice to share their data or not and limit how much of their data is used, she explained.
On balancing competition with collaboration, especially since open ecosystems require the latter for them to truly serve their purpose, Unionbank would rather focus more on “co-opetition,” adding that there is a place for different industry players to benefit from a win-win-win model, Dizon-go said. “We understand that some financial institutions, some fintechs and some third parties have specific products and services that we don’t, and we believe that for us to be able to better serve our customers, we should be able to integrate those specific products and services into our own,” she added.
“Open banking and open finance are only as good as the number of players that cooperate within that ecosystem, and that’s, I think, one of the biggest things that we have to consider.” Dizon-go said that the ninth-largest lender in terms of total asset “can create more value.”
“More importantly, it adds value to our customers and how they do their financial transactions, and that is what’s really important to us,” Dizon-go said. “Of course, as a bank, there is a bottom line that we need to think of, but we believe that there is a space for both to co-exist, for the customers to be served appropriately and for the bank to be able to have new business models.”