In the latest instalment of our ongoing series to explore Open Banking and the future of financial services, we sat down with Luke Scanlon; Head of Fintech Propositions at globally recognised law firm Pinsent Masons.

With significant credentials in the financial services sector, Pinsent Masons advise a range of companies in the financial sector. From innovative fintechs on their applications as well as established institutions on their API strategies.

In this interview, we explore the opportunities, the threats and what the world of Open Banking will look like in 5 years.

What’s the biggest opportunity in Open Banking?

I think it’s a really interesting question and it’s an interesting question at this time because there’s so much discussion around what Open Banking could do for the future of financial services and for customers specifically.

But recently, it’s about more than just Open Banking. It’s about going beyond simply the Payment Services Directive 2 (PSD2) in Europe or what’s happening in the UK and compliance with those regulations. It’s really about how banks and other financial service providers and fintechs can make the best use of data about individuals. So not just their payments data but also the many other datasets that they have.

And then also going outside of financial services in terms of utilities data and telco data and combining those datasets and saying: what could that actually mean for customers in the future.

What’s the biggest challenge?

That opens up lots of challenges around the organisation. So as we all know, particularly in financial services, often organisations have siloed data that doesn’t relate to one another. They have legacy technology. They have technology that’s not interoperable or they want to reduce their technology stack.

And now we’re talking about bringing on new technology so it’s just aligning all those different technology issues and making sure it’s done in a compliant way. So that’s the long-term challenge in Open Banking.

One of the short-term challenges is all about implementing the regulation as it is. Deadline after deadline is being missed so there’s a lot of work to be done.

What’s going to separate the winners from the losers?

Dealing with compliance is one issue and dealing with it well is, of course, something that every business needs to do. But separating the winners from the losers is more about thinking about the future of Open Banking and how you collaborate with other organisations.

That includes how you make the best use of what you do well. And how you can bring in the right partners who do things that perhaps you don’t do so well or that you haven’t done traditionally. Learning from them and then providing new types of services and new types of products to customers.

For traditional financial services organisations, they need to now start thinking of themselves as technology providers. They’ve never done that before. They’re providing APIs so how do they monetise those APIs and how do they benefit their customers with those APIs is a new challenge for them.

What does the world of Open Banking look like in 5 years?

It’s a tricky question to answer because what I hope it looks like is that as consumers, we have control of our data. Not just our financial data but all the data that affects my life. And that I can then use that data to be able to obtain the very best services that suit my lifestyle or that will help me in the future.

Five years from now, the best-case scenario is that we start seeing marketplaces where you can purchase those services in a digital context.

For more insights from other experts in this series, visit our Open Banking hub or sign up below to get new interviews straight to your inbox.