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  • Writer's pictureVanessa Ronan Pearce

Regulation alone won't make Open Banking work.

Vanessa Ronan Pearce writes about Open Banking and how maybe, just maybe, the US has got the settings right.

Having been involved (a bit) with the introduction of Open Banking in Australia and now a part of the conversation around Open Banking in NZ, I knew a little about what happened in Europe but nothing about the US market.

Simon Taylor wrote an article in October 2023 called Open Banking: Endgame. In this article he proposes a thesis that could be applied to Australia or NZ: "while long-awaited, regulation alone won't resolve the fundamental incentive issues underlying the challenges in US open banking."

There appears to have been a similar struggle in Australia and this is an issue raised in the open banking arena in NZ.

US insight:

"The US Open Banking market is a massive success, but it doesn't always work. Open Banking is more successful in the US than in Europe. The EU has around 5 million regular Open Banking users, while the US has closer to 80 million. Visa says 87% of consumers link their accounts to another service.  The market is still growing."

That is huge and pretty impressive... why in ANZ are we always looking at what the EU has done? Maybe the US could hold the key to a few insights.

The standout comments on learnings and what to do are very similar to conversations being had in Australia over the last 6 years and happening now in NZ.

"Incentives matter:

- There must be an economic upside for all participants.

- Security needs to be a widely shared burden.

- Can we create an industry utility to help here?

What should we do about it?

- Lean in

- Own the gateway

- Get creative

The free market has delivered something broken, imperfect, but incredible in its own right."

Feel free to reach out for a chat...


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