My former partner Steve Richmond has a post on the very powerful idea of an open finance platform. He's talking about a a bank/financial services account structure that has an API-like framework for third-party services to integrate and compete for customer attention in a marketplace environment. I think it's brilliant. Steve has been working with a few leading financial institutions and it's not that surprising to me that he's thinking about the intersection of financial services and the connected economy.
His vision is:
In this model, the bank owns your "profile," which sits with your
deposit account. Apps use this profile to deliver services that are
interesting and valuable to you – and compete for your business openly
on the platform. Data gets shared two ways, always with explicit
authorization of the user.
Instead of billpay, you have a network of friends and vendors who you can easily transfer funds to.
In the US, the fragmented structure of financial services, and the state regulated banking environment may interfere with this kind of innovation. At one point, e-Trade seemed determined to change the way people banked. PayPal started out with radical disintermediation, but got stuck in cheap p2p payments. It was able to reduce friction in its core area, but did not spread wide outside of that. Prosper took another aspect, the personal loan area, of financial services, but I am not sure how it's been going. Anecdotally, I have been hearing bad news about default rates.
The platform idea is a radical one. It's also one that probably will not grow out of the incumbent players in the market. I'll be thinking about this idea.