From
Simon Deane-Johns, Consultant Solicitor at Keystone Law
Below
was my SCL prediction for 2008, which has held up pretty well. Personally, I took
on a consulting role at Amazon.com early in 2008 and spent the next three years
helping on various EU payment services including getting their e-money
authorization in Luxembourg. The next 18 months were spent helping wrench
WorldPay from RBS’s cold, dead hand (that business then floated and has been
sold again). Since 2012 I’ve been back in private practice full-time, advising
mainly on e-payments and P2P lending, which itself became FCA-regulated in 2014
and is forecast to produce nearly £5bn in loans for 2017. Small business
finance has also opened up more widely, with those recalcitrant banks having to
be legally obliged to share their declined small business loan applications
with ‘designated finance platforms’ and provide access to their credit data on
SMEs. A competition investigation into the markets for personal and business
current accounts has exposed the banks to further competition for payments
functionality from non-banks. In 2018, the second Payment Services Directive
introduces the new “account information services” and “payment initiation
services” which involve non-bank access to payment accounts via new Open
Banking APIs. Meanwhile, the rise of ‘Big Data’, algorithms and distributed
ledger technology are also combining to continue the relegation of retail banks
into the back-office of Financial Services 3.0…
From
Simon Deane-Johns, General Counsel and Company Secretary of Zopa: www.zopa.com
[In 2008] Economic conditions will deteriorate further in the financial
services industry. Downward pressure on revenue and the cost of funding,
marketing and distributing financial services to consumers and small businesses
will force institutions to compete on innovation and service quality. But not
being organised to provide either, these incumbents will fail to resist the
entry of facilitators that have built trust and loyalty by empowering consumers
to get the product that is right for them personally in other retail markets.
Banks will be the back office service providers, not the front, for Financial
Services 2.0.
