Open Banking: The Path to FI Enablement
Available On Demand – 25 minutes
Open banking initiatives and fintech collaborations continue to expand in an effort to improve financial services offerings for businesses of all sizes. What does this mean for you? Join the CCG team with host Scarlett Sieber and hear the fintech perspective to open banking from Ninth Wave’s head of sales, John Vander Vennet, as Scarlett and John discuss open banking, the technology challenges being faced, and what steps can be taken to create your strategic plan.
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Scarlett Sieber Welcome back to CCG is webcast series, I am your host, Scarlett Sieber, Managing Director, Chief Strategy Innovation Officer here at CCG Catalyst. We are coming back to you with another webcast episode from our series The New Normal. And we are back talking about open banking. As you all know, this is a topic near and dear to my heart. This week we’re going to be talking about open banking. The path to FI enablement. I am super excited. We have someone who has direct experience doing these things. We have a guy who is an industry veteran, has spent 20 years advising financial industry and the banks and what not on technology globally. So he knows what he’s talking about. We have a special guest in John Vandar Vennet, who is head of sales at Ninth Wave. John, thank you so much for being here. We’re delighted to have you.
John Vander Vennet I’m delighted to be here. Thanks very much.
Scarlett Sieber Awesome. So before we dive into this very exciting topic, I would like to do a few housekeeping things. As always, you will see a variety of buttons on the bottom of your screen. That one in the center with the picture. That is our bios. If you click on that, you will see our full backgrounds. You will see John’s background. You can find more about the lovely work that he’s done over the last 20 years. And you can connect an email with me and the rest of CCG team directly there through our emails. On the right of that, you have the CCG logo. That is your go to resource for all things that you could care about. We have recently published articles, we have links to future webcasts because of course we do this on a weekly basis and then more information from blogs and other things that we’ve done so you can find everything you want right there. To the left is your Q and A. So throughout the course of this webcast, if you have questions, please go ahead and enter them there. We will do our best to answer if we do not get to it in the webcast, we will respond to by the end of the day. You can also feel free to list comments there. We’d love to hear your feedback. And as always, we try to keep these succinct, to the point, topical and relevant. We don’t want to waste your time. We know how busy you are as banking executives. So the conversations usually last fifteen or twenty minutes. And with that, John, let’s go ahead and get started. Okay, so the topic of open banking. When we think about someone like Ninth Wave and the players that you are in this ecosystem, how does Ninth Wave define open banking? It’s kind of an ongoing conversation that we have. And then is it the same for you and for Ninth Wave as API banking?
John Vander Vennet Yeah, great question and something that we think about a lot. It’s interesting having been in this industry for I guess more than 20 years, but I’ll just say 20 to make myself feel better. Fintech has become a very hot term. It certainly wasn’t hot when I started. And that’s great. I think it’s good for all of us. But it also sort of is, in my view, a bit overly broad. And I think maybe a little bit is happening from an open banking perspective as well. So open banking kind of means a lot of different things to a lot of different people. Generally speaking, kind of the delineation that we make is kind of capital O capital B open banking, meaning sort of a regulatory reality that we see in the UK and Europe versus sort of a little O little B open banking here in the states where I guess we have more of some de facto open banking as opposed to sort of overarching legislation or regulation. So we definitely see open banking and API banking not being the same thing. We’d argue that in many ways and for many financial institutions, whether they are intending to enable open banking in many ways they already are. If you’re talking about the ability for a consumer to be able to consume their banking data so their credit card details or banking transactions in an app of their choosing, that happens, you know, all day, every day. Generally speaking, through aggregators like Platt and Yodlee and others. And while this is changing kind of in the main, it’s done largely through screen scraping. And that creates all kinds of challenges, we think from a consumer perspective, from a financial institution perspective, et cetera. Whereas sort of API banking I think is really being more on the front foot from a financial institution perspective and being more intentional about what are the data elements that we want to enable. Are consumers, again, be it a retail customer, be it a commercial customer? You know, what are those elements? What are those use cases that are meaningful and valuable to them that we can help support through means of communication that are, I think, more modern, more secure, more intentional. And that’s really API. And I think, again, as an industry, I think everybody is really trying to head in the same direction. I don’t think the aggregators are necessarily going to continue to pursue screen scraping forever. I think they recognize that even for them or maybe not even for them, but for them, you know, direct connectivity largely through API is really a better way to go for all involved. So that’s high level how we see that the difference between those two.
Scarlett Sieber I appreciate that. I think that was very helpful. So, you know, when you mentioned on the API banking side about financial institutions being on their front floor and intentional about it, I certainly had a lot of connections around that. And you mentioned kind of Europe versus the U.S. and as we were talking offline, I was telling you about my experience at BBVA and some of the stuff we were doing there. I am curious from your perspective and having worked with so many financial institutions, it’s great to have the strategy and desire to be on your front foot and to be intentional. But what are some of the technology challenges that banks and credit unions face on this path of this idea? What does that look like?
John Vander Vennet Yeah. And for context, you know, at Ninth Wave and really throughout my career, but most recently at Ninth Wave, we deal with institutions of a variety of sizes. So everything from top 10 money center banks right through to community banks and credit unions, et cetera. I think that there is going to be challenges that relate to the type of institution, the size of institution, the number of business lines and all that kind of stuff. But I think, generally speaking, one of the things that a lot of these financial institutions are trying to figure out is just where does the data exist and then what are the paths to opening up channels to easily access that data. Whether it’s internally for their own use, where they’re trying to get, you know, a more consolidated view of a client across maybe business lines within sort of the four walls of financial institution, as it were, or whether it’s to enable permission data sharing to an external application. I think those are those are challenges that they face. I think some of the larger banks do have the ability. They’ve got potentially larger technology budgets, larger technology teams. But maybe the offset there is that they also have more complex environments where they’ve got a lot of systems. They’ve done acquisitions and they’ve got legacy and things like that. So this is not going to be a surprise to anybody listening to this conversation. Maybe on the smaller end the technology landscape may not be as complicated, but there may be some challenges in terms of their ability to have those systems be open. I think what we’ve seen in the large core providers, they each seem to have been making pretty good strides to provide their clients with tooling that allows them to expose the elements, data elements or different pieces of that core of that online banking system via API. We deal with a lot of the major core providers. And it seems like most, if not all of them have capabilities that are evolving that will allow their customers to be able to sort of interact more openly from an API perspective. I think the challenges are still there. But I think there’s a good amount of focus that’s been placed and I think it’s very promising for everybody involved.
Scarlett Sieber So you mentioned data in a variety of capacities that response I think it’s certainly crucial as we think about all things on open banking. So for a financial institution and you talked about kind of all of the levels from top 10 to lower down. From them to move from a current state to open banking, do you see this as a single step or is this a multi-step path really beginning with data integration and leading to leveraged API?
John Vander Vennet Yeah, I think it’s probably not a single step. I don’t think it’s a light switch. What’s the analogy? It’s not a light switch. It’s kind of a dial. Maybe that’s the way to think about it. I think financial institutions in in my humble opinion, in our humble opinion, should think about this as less of a technology challenge, although there’s obviously a big technology aspect to it. But more from the standpoint of what business challenge or opportunity am I trying to address? Is this going to help me win market share? Is this going to increase client satisfaction? Is this going to allow me to penetrate a broader portion of my client’s wallet, as it were? What am I really trying to solve for here? Am I trying to make the experience more seamless? More secure? Those kinds of things. And then I think you should you have sort of those use cases that I think you can work backwards and address. OK, you know, what are the technology elements? What do we need to do? What parts of the organization need to be involved? But I think if you kind of have that business outcome as the North Star, and then that would probably also naturally lead a financial institution into sort of more of a phased approach. But what do we think is going to have the biggest return on this investment? And again, that’s whether they want to partner with an existing technology provider that they’ve got, whether they want to, you know, choose to build some things, whether they want to partner with an enablement platform like a Ninth Wave. You know, regardless, I think they should think about sort of what do we want the business outcome to look like and then map out what it needs from a business process and technology perspective.
Scarlett Sieber I love what you said there. And I want lots of head shaking because I’ve seen this firsthand and then even on the client side that it’s really focusing on the business strategy is the priority. I think it’s extremely crucial because it’s so easy to get this shiny object syndrome or be reading articles you see online and say, OK, open baking is a new thing. We’ve got to do this without having a clearly defined strategy and objective of what you hope to achieve with this. So totally in agreement there. So let’s go a little bit on the tech side for a second. You know, these enable forms like a Ninth Wave. So you do offer an API platform. A lot of our listeners tend to be banks and credit unions on the smaller side, although it certainly does go up to the bigger institutions as well. Are there any minimum requirements or qualifications for a financial institution to leverage your platform and how does it fit into an I.T. infrastructure and architecture that exists within these institutions?
John Vander Vennet Yeah, great question. So no real minimum requirements for us. What is critical for us is to understand where the data resides, what data elements we need to have access to. And again, that’s all sort of use case oriented. Right. And generally speaking it is less involved than I think a lot of our clients or prospects, you know, assume it might be going in. That’s not to say that there’s nothing to it, obviously. But the use case, generally speaking, whether you have a commercial client that wants to have access to their relevant banking data in an ERP as an example. That use case can go from very, very straightforward and simple to a little bit more sophisticated. But even then, we’re not talking about massive, massive amounts or different kinds of data. So from our perspective, really, the minimum requirement is that we just need to understand where that relevant data resides within the financial institution and then work out a method of exposing that data to us so that we can send it through, if you will, to the destination application to satisfy the use case. And so we’ve been doing this for a lot of years and so we have a bunch of different capabilities from an integration perspective. When we started, there was no such thing as cloud for banks. Everything was On Prem. And obviously the world has changed a whole lot certainly over the last, you know, three, four or five years. So in terms of where we sort of sit and text back, historically, it was sort of On Prem. But, you know, over the last few years everything we’re doing is cloud based. And so, we obviously are very cognizant of the security concerns. And those are you know, that’s a huge part of what we want to make sure that we’re enabling is secure and permission data sharing. But in terms of where we are in that tech stack, we don’t we don’t have any requirements that you must have an online banking capability as an example of this or that kind of core system, effectively, we’re flexible enough to sort of fit in. But we’re in some sense, isolated from those. So it gives a financial institution flexibility if they’re in the midst of changing out some of those parts or they’ve got an online banking capability for their commercial line of business and a different one for the retail, etc. We’re able to fit and connect and all of that.
Scarlett Sieber Thank you. That was that was helpful. This is definitely a personal question and one that we always try to include as we think about kind of the fusion of banking and fintech and everything that encapsulates that ecosystem. I’m curious, especially because you’ve done this many times, but let’s talk about your experience at Ninth Wave. When you’re working with and partnering with banks and credit unions to this point, are there any consistent recurring hurdles that you face? And if so, this is kind of like your time, you have the mic in front of a bunch of the banking execs, is there things that they can do on their side to help streamline this process? Because I’ve been the internal advocate for the fintechs and the enabler and ecosystem player so many times. And there sometimes is that butting of heads. I’m just curious, is there something consistent that you’re seeing as it relates to open banking? And what can banks or credit unions do to kind of better prepare for conversations with people like yourselves?
John Vander Vennet Yeah, I think again, maybe it’s a repeat of my earlier answer. I think having a good understanding as to what this process is going to enable. So it’s not sort of open banking because we need to tick a box and it’s for its own sake. I think kind of being intentional about it and understanding kind of the use cases I think is really important because I also think that will then lead to where does this fit with all of the various projects and priorities that any financial institution has at any given time. Obviously, they could be pursuing a number of different strategies that involve modernization or rationalization of some piece of their technology infrastructure or whatever the case may be. So I think having really an understanding as to where this thing fits in strategically is really important because then you can reduce maybe some of that friction within the organization. Because clearly something like this is in our experience, typically it is going to touch on, you know, if an organization has should have a chief digital officer or chief experience officer or thereabouts head of a business line. We talked to a lot of, believe it or not, salespeople who are more on the commercial side. But they’re hearing very, very specific needs from their current book of clients in terms of integration of data and that kind of thing. So they have an important place at the table. But so do CTOs and CCOs and all that. So it is going to involve a lot of different folks. And we see that as part of our job, which is trying to be, again, a bit of an overused word, but we really do want to be consultative to help them sort of work through. Where does this fit in in terms of priorities? What are you trying to achieve at the end of the day? And then I think you do a lot of that kind of the framework and the path forward becomes a lot smoother.
Scarlett Sieber Got it. We are running out of time. But I do want to try to get two more questions in. So, if we can get succinct answers to these last, would that be super helpful because there’s so much I want to hear from you. First one, we talked a lot about the data aspects again earlier. Who is responsible for securing that data? If you’re in a relationship with someone like a Ninth Wave who’s responsible for the securitization of the data?
John Vander Vennet Well, we see that as really a joint responsibility. Right. So this is probably not a short answer, but we certainly have a responsibility as it relates to what we’re doing. Clearly, banks have a responsibility and take that quite seriously. So we do a lot of we have a lot of conversations around how you get consent to share the data, how you authenticate the process straight through. And how you keep the data secure right through from financial institution through Ninth Wave to that destination application. So it’s really it’s not just one part of the puzzle that that is responsible for that.
Scarlett Sieber Got it. OK, last question. Can you share maybe top one or two, and this kind of ties nicely into the one we just asked, top one or two opportunities and risks associated from John’s perspective with open banking?
John Vander Vennet Yes. I would say from the opportunity side, again, we’ve had a lot of conversations with organizations that are in competitive marketplaces. And what they’re realizing is that they need to, of course, come to the table with a prospective client with all the various services that as a financial institution, they can provide, whatever that may be. But I think what you’re hearing more and more, particularly more in the commercial context but I think it’s there in retail as well, which is from sort of an integration and the ability to allow that commercial client to leverage the investments that they’ve made in technology that they use, whether it’s Treasury management systems or ERPs or what have you, cloud accounting, et cetera, to be able to sort of integrate seamlessly into that is becoming, in our view, a bigger and bigger differentiator. I think that’s a huge opportunity. Just the ability to have sort of more of an open architecture approach to things, I think is maybe a better way. That’s sort of a higher level way of saying it. I think that’s a big opportunity from a challenge perspective. Look, I think embarking on these types of projects are going to be challenging. I think to me, maybe equally as big if not a bigger challenge is to sort of not have a plan, to be sort of intentional and sort of aggressive in terms of what you as an organization want to do. Because I just think that it’s probably a little bit overdone in the current environment, but I just think that if you look at what we’re going through right now with COVID, it seems to us that if a financial institution has a digital transformation plan that they were going to put in place over the next 12 to 18 months, I think for most people those plans have needed to be moved up and maybe compressed in terms of timelines because a lot of this transformational stuff that we’ve been seeing is accelerating through this process. So I think it’s a great time to figure out how using a financial institution are going to enable sort of more of an open access, open banking environment.
Scarlett Sieber I could not agree more. We’ve seen this digital transformation kind of move from a nice to have and certainly on these roadmaps may be priority number six or something to a must have. So I’ve had conversations on this subject with a handful of banking executives. And I certainly think that is mirroring everything that you just said. OK. Thank you so much, John Vander Vennet, again, really appreciate your time. Head of sales at Ninth Wave. I appreciate your perspective. And open banking and API banking are such current topics. They’ve been around for a while but here in the U.S., we’re still trying to figure out a lot. Your perspective is very valuable. Really focusing in on the intention and the business strategy I think is crucial. For all of you listening. Thank you so much. For those of you watching on demand, you can still ask questions we will be able to get back to later as well. As always, please tune in again next week. We have webcasts every week. You can find the links below and the resource section. Besides that, have an enjoyable rest of your day. And thank you so much from the CCG Catalyst team, John, enjoy the rest today too and look forward to staying in touch.
John Vander Vennet Thanks so much. Enjoyed it. Thanks, everybody.
Scarlett Sieber OK, we are done, sir. Great. Thank you very much.
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Chief Strategy & Innovation Officer Scarlett Sieber is one of the world’s premier voices in financial services. She is among the industry’s most sought-after speakers as a thought leader and innovator with expertise in driving organizational change at both startups and enterprises across the financial services and fintech ecosystem. Scarlett has been invited to speak at over 100 prestigious financial services and technology conferences globally, including Money20/20, Finovate, South Summit, and NASA’s Cross Industry Innovation Summit.
Scarlett’s experience includes founding her own startup as well as working at banks such as BBVA, USAA, and Opus Bank. She is a leading fintech influencer, included on lists such as Top 100 Women in Fintech 2019 and Top 10 Fintech Influencers in the U.S. Scarlett also has deep experience in digital strategy and innovation implementation, making her a key asset to building cutting-edge programs for our clients.
John Vander Vennet is Ninth Wave’s Head of Sales. He leads the company’s sales and business development efforts to accelerate revenue growth and expand market share.
Prior to joining Ninth Wave in late 2018, Vander Vennet served as Head of Sales and Client Management at Coleman Research, building relationships with leading investment and private equity firms, consultancies, and corporations worldwide. He has also held leadership and business development roles at prominent corporations in the financial industry, including AltX (acquired by Addepar), SunGard, Currenex (acquired by StateStreet), and Morgan Stanley Investment Management.
Vander Vennet holds a bachelor’s degree from Boston College.