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What lies ahead for banks is, in many ways, a blank page. Major aspects of the future are waiting to be mapped out. For example, while Europe’s Payment Services Directive (PSD2) mandates that financial institutions give customers and third-party integrators programmatic access (typically API-based) to their data, it does not specify where the data should reside. Nor does it clarify how the security and authentication models will work.

As part of their rotation to winning-digital business models, banks must take the lead role in setting guideposts. They can build on the fact that customers still have a lot of confidence in the banking sector to protect their data and execute transactions in a safe and secure manner. In North America, for example, 86 percent of consumers trust their bank over all other institutions to securely manage their personal data.2 Just as the technology industry took the lead in shaping its own standards, banks cannot wait for regulators and governments to set the terms of competition. Sixty-six percent of bankers globally (82 percent in US) say government regulations have not kept up with the pace of technology advancement; 61 percent say that the industry’s regulatory environment is outdated and a barrier to growth. For example, legacy regulations in Japan limit a bank’s ownership in non-finance companies to 5–15 percent.3 Regulators in Japan consider fintechs to be technology firms, not financial firms—so while megabank Mitsubishi UFJ might want to take a portfolio approach to investing in fintech startups, regulations make that impossible. In response, Mitsubishi UFJ is building an in-house financial technology R&D division to deliver the innovation they need.

Bankers understand industry challenges— security, fraud, privacy, digital ethics, emerging technologies like blockchain and so forth— much better than regulators. First movers can move faster than regulators (and even pull regulators along) to pioneer uncharted banking terrain and influence customer behavior. They can help shape the new standards, processes, practices and crossindustry partnerships that will underpin innovative models. Those who are finding a place at or near the center of their new ecosystem look to gain freedom to innovate (53 percent), opportunity to develop standards that competitors will be expected to follow (52 percent) and expanded opportunities for trusted partnerships (52 percent). Those who are not risk being regulated out or being poorly positioned in a competitive landscape they did not have a role in creating.

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