Christian Visti Larsen, Co-Founder & CEO NewBanking spoke to Zoya Malik about the prospects for PSD2 to be kickstarted by Open Banking and User Centric Encrypted ID to facilitate secure and trusted operations.
ZM: Tell us about your view on Open Banking take up rates by banks globally in 2019?
CVL: As a close observer of the development of Open Banking, I see a clear divergence in adoption rates. It is most alarming that some banks still haven’t implemented a productive and functional gateway/API to meet Open Banking requirements. Even in the Nordic countries where I believe the banks purport to be digitally ready, they seem to be lagging behind. Will they be ready by March 2019 for PSD2 Open Banking? I doubt it.
ZM: What is the attitude of banks currently towards Open Banking? Where must they invest?
CVL: We do see some banks actively promoting themselves as “Open for API Business,” but when it comes down to real products and services, there is still a great deal of reticence. In terms of where they should invest? I truly believe, that the ones that are actively looking for API partnerships and that can generate new customer channels, will be the winners in the Open Banking arena. We tend to see the “innovation circus.” where all intentions are good, but there is a huge lack when it comes to implementing solutions. There seems to be a skepticism by banks towards customer acquisitions through digital channel as opposed to than their existing ones.
ZM: How well are banks advising their customers about using apps, options with their accounts, on-boarding and the benefits and value?
CVL: Not well at all – I think banks are still afraid to enter into partnerships due to a potential reputation risk. It’s still better to decline a partnership and forego a potential positive relationship, than risk failure. I don’t really blame them being cautious – banks are really taking the heat at the moment.
ZM: What more do regulators need to do to encourage banks to invest in Open Banking and secure ID?
CVL: It’s time for regulators to ensure that banks that do not participate in Open Banking or that are trying to create obstacles, are penalised. However, I do believe that the banking industry has a lot of lobbying power. We are facing age-old attitudes that become problematic. It’s hard going for services providers to the banking and finance industry to make good, due to the banks making it difficult for providers to utilise their APIs.
ZM: What are critical concerns for banks and customers in signing up to Open Banking?
CVL: I’m sure that security is the most critical factor. Banks’ concerns and questions should be, “are our users really ready to have banking Data exposed to any third-party provider and do they understand the risks”?
ZM: What is “user centric encrypted identity” and how is this different from current online access to banking platforms and FB and Google ID access?
CVL: The absolute biggest difference on our platform, is the ability to facilitate the shift of ownership in data. It is a Personal Encrypted Data Vault that allows 100% ownership and control of data. At the same time APIs implement easy on-boarding for multiple organisations with Secure Data sharing, the possibility to upload and verify that data, and execute GDPR i.e. ‘The right to be forgotten’. In other words, ‘Self-Sovereign Due Diligence on Identity Data’.
ZM: Where else will there be a trend for user centric encrypted identity to drive assurance and trust in deploying services in other related finance sectors?
CVL: Yes indeed, we see trends currently also in the legal and medical sectors, and have identified the need across most others sectors.
ZM: How can user centric encrypted identity be applied to blockchain and cryptocurrency activity?
CVL: Well, we have enabled blockchain as a means for our audit trail. Our CTO, Morten Helles is on the international ISO standard board for blockchain. Within this standardisation however, it is currently not possible to use blockchain for storing any personal information, as it is does not meet GDPR requirements.