Reform and Regulatory Challenge of Open Banking to Traditional Financial Industry - Part 1

The essence of open banking is sharing financial information. It is the reconfiguration of financial data as a factor of production by using modern new technologies and new institutional arrangements, thus forming a new financial business form. Open banking does not change the essence of finance. It is the same pricing of credit risk, but the way that open banking use for pricing of credit risk is different. It is the change of open banking to the traditional financial service, and will have a subversive impact on the traditional financial industry.

First of all, open banking is a new form of financial industry, subverting the behavior of traditional financial industry. Open banking also operates general financial services, such as loans, deposits, payments, remittances, foreign exchange transactions, investment, insurance and wealth management, and even innovates some financial services that do not exist in the traditional sense. However, the financial services of open banking do not need to incorporate different services into different industries. Instead, they break the limits of the traditional financial industry and integrate different financial services through various platforms and APIs, as to provide customized financial services for customers. As a result, the traditional financial industry will be completely overturned.