October 27, 2017
"Banks must actively embrace the move to open APIs in order to secure their role and position in the new ecosystem of financial services and payments. Achieving this will require banks to develop a clear vision of their future, and reinvent themselves as technology businesses to turn that vision into reality.
Open APIs are rapidly emerging as a vital cornerstone of the future of banking and payments services. Banks must move now to build them into their business – or face playing catch-up in the years to come." – Hugh Cumming (CTO, D+H) & Vinay Prabhakar (Group Leader of Payments, Product Marketing, D+H)
Mastercard opened up access to its blockchain technology via its API published on Mastercard Developers. Mastercard’s blockchain solution provides a new way for consumers, businesses and banks to transact and is key to the company’s strategy to provide payment solutions that meet every need of financial institutions and their end-customers.
The company has tested and validated its blockchain and will initially implement the technology in the business-to-business (B2B) space to address challenges of speed, transparency, and costs in cross-border payments.
The Mastercard blockchain technology will complement the company’s existing capabilities including virtual cards, Mastercard Send and Vocalink to support all types of cross-border, B2B payment flows – account-based, blockchain-based and card-based.
Mastercard's blockchain solution has the ability to power non-card payment transactions such as B2B payments and trade finance transactions. It also has the ability to power non-payment solutions such as proof of provenance that helps authenticate products across the supply chain.
HSBC was the first to publish an open banking API last month, and it has already built a new mobile banking app to test out some of the features open banking promises to bring.
"There is one thing that we need to make sure as we move towards the implementation of open banking, and I mean, we as an industry, need to make sure that the accreditation and authentication of the third parties that are going to turn up and participate in this ecosystem are rock solid.
"We have to pay attention as we are going to be exposing APIs, which means we are sharing our trust with those people, so we need to ensure that all of the companies that are turning up are worthy of that trust." – David Knott, Chief Architect at HSBC.
"We must have a rock-solid and secure set of APIs and we won't launch any APIs into the bank where we aren't comfortable about the security," he says. "At the same time, part of the value of this initiative is to try and accelerate innovation and value for customers. So on top of those APIs, we will innovate fast." HSBC announced that it was the first major UK bank to release an aggregator app at the end of September, allowing the selected users of the HSBC Beta app to see all of their accounts on one screen, even if they are with one of 21 rival banks. The 'test and learn' environment is being used to develop a new mobile banking app which it plans to release for customers in early 2018.
In a not-so-surprising, but a very significant step, a technology company moves into a credit card business. Uber's credit card is a sign of the times... Times when financial institutions do not have a monopoly on financial services. Even better – a financial institution made a step into uncharted waters by partnering with an unusual player: a notorious ride-sharing company.
The financial services industry is blind to the nature of the competitors' businesses. The further we get into 2017, the more apparent it is that finance and tech are undividable – a successful tech company will move into financial services, and a financial institution that does not innovate on a tech level will inevitably become obsolete.
Uber is getting into the credit card business.
Announced today in partnership with Barclays and Visa at the Money20/20 conference in Las Vegas, the new card gives Uber yet another point of access to incredibly valuable customer information and marks another front in its campaign to assume a larger role in online and offline commerce.
The no-fee card offers a bonus of $100 after spending $500 on purchases within the first 90 days, and has other perks, like 4% back on restaurants, take-out and bar purchases; 3% back on airfare, hotels and Airbnb or other short-stay rentals; 2% back on online purchases; and 1% back on everything else.
The new card also gives users a $50 credit for online subscriptions (after spending $5,000 on the card per-year), phone insurance of up to $600 if someone uses the card to pay their monthly phone bill; and exclusive invites to events for card members.
To unpack that a bit, in exchange for fronting the cash and getting information about the $5,000+ worth of stuff you’ve bought, Uber will hook you up with $50. And the company’s card will also insure your phone once it has information on your carrier and what you’re spending money on through that carrier.