The confusion of money

When I was a lad, we had one bank account that we opened when we were going to university and you stayed with that bank for life. Today, I have many bank accounts and credit and debit cards. I use Wise, Revolut, Monzo, Lloyds, American Express, Millennium, HSBC and more. Then you add in pensions and saving schemes which, over a few decades, are also in many different pots and you get the result that I have no clue what money is where. Oh, and then add crypto, which is also in different places, and let’s not go there.

In other words, when I was younger there was one place for my money; now I’m older, there are over ten places. It is too many. So, I asked my LinkedIn followers to vote on this and one-third agreed with me, whilst two-thirds disagreed.

A particular comment that I liked came from Helena Potter, who said that Revolut “has solved a lot of my problems with dealing with multicurrency accounts and I can link my other brick and mortar accounts to the app and so I have an overview”. This is where Open Banking and aggregation strike to the core of the customer experience and engagement.

If the customer can place all of their fragmented finance into one place, easily, simply and visualised, then the provider has a huge advantage. And this advantage will get bigger every single day, as consumers start using more and more financial providers.

But then you have the bigger issue. If a customer aggregates all of their investments into on app and that app gets hacked, where does the fault lie? With the customer; with the aggregator; or with the financial institution that provides the service that got hacked?

This is where the constant question of Open Banking arises: who is accountable when it goes wrong?

We had this recently with the massive Microsoft outage bringing down services worldwide. The media all blamed it on Microsoft and yet the issue was not with Microsoft, it was with their partner Crowdstrike.

The blame game gets interesting and, specifically, when it comes to financial services, who is to blame? It is likely that a lot regulators will start what I will call end-to-end regulations managing the whole value and supply chain of finance, and making it clear that the intermediator (or curator if you prefer that term today) is to blame. In other words, the bank or financial institution that allows open finance access will be to blame if the system is corrupted or intercepted.

What does that mean?

It means that any financial institution will need tighter contracts, oversight and management of any third party they deal with. Coming back to basics: if a company provides aggregation and integration of all of my disparate and fragmented financial accounts (Revolut), then their duty of responsibility in this process will be far greater than any other financial institution in history.

#justathought

 

Postscript:

Respect to CrowdStrike President Michael Sentonas, who appeared at the recent DEF CON's annual Pwnie Awards to accept the 'award' for ‘Most Epic Failure’ because 'we got this horribly wrong [and] it's super important to own it.'