Will it be a mutual-growth partnership between traditional financial services players and fintechs or an event that disrupts incumbents and ushers in a truly new generation of digital financial service companies?
These questions are buzzing in my head after Xero’s Small Business Director Nicole Buisson and Banking and Fintech Head Chris Barton brought together both sides of the equation for a stimulating, and at times heated, panel discussion in Auckland.
The line-up featured Will Mahon-Heap from Revolut; Rhiannon White, Chief Digital Officer from Westpac; Ben Murphy from Spotcap; Nicole Buisson and special-guest Xero's UK Head of Fintech Edward Berks who outlined the UK Open Banking story.
The UK regulator the CMA enforced Open Banking at the start of the year to make it easier for consumers to move their financial data to rival service providers and to encourage switching.
Since its launch 63 firms have started using Open Banking, while the technology was used 1.2 million times in June to securely share data, up from 720,000 the previous month.
Which sounds exciting except the reaction from the UK's major lenders is being seen by some as less than enthusiastic.
“For the bigger banks there’s no commercial reason why they want to do it. Without that it’s a very difficult thing to do.”
Anne Boden, chief executive and founder of Starling Bank, is quoted saying: “For the bigger banks there’s no commercial reason why they want to do it,” she said. “Without that it’s a very difficult thing to do.”
And the incubments certainly aren't jumping on a PR Open Banking bandwagon - a recent study showed 72% of UK consumers hadn't heard of Open Banking and only one of the UK's big banks, HSBC, has released an open banking product into market.
So one of the questions for the panel in Auckland today was will Open Banking play out in a similar way in New Zealand? Will it be regulatory-led or industry-led? And could it bring in massive innovation in consumer services through a partnership between incumbents and fintechs? Or will the incumbents only reluctantly participate?
"If a partnership was going to happen, it would have happened already."
On the fintech side of the panel, Revolut's Will Mahon-Heap was adamant: "If a partnership was going to happen, it would have happened already."
On the banking side, Westpac's Rhiannon White said banks, like hers, were already investing in open banking APIs to partner with fintechs.
For Xero, the opportunity to leverage open banking for its more than 300,000 small business subscribers in New Zealand will be based on a number of interesting use cases around businesses understanding their positions better and crucially getting paid, making payments faster.
Xero's Berks said UK case studies showed a "pay now" button means getting paid 50% faster. A world away from SME owners spending dismal Sundays manually synching payments across two browsers in their accounting software and internet banking and waiting weeks for payment.
The UK banks have lost a lot of trust since GFC and have had open banking thrust upon them.
In New Zealand banks are in a different position - but there’s a growing number of fintechs readying for the coming open banking revolution - Jude.io is a locally-grown example testing in beta, Revolut and Go Cardless will be launching here in the next few months.
To my mind, after a decade working in a bank and now working in fintech, the challenge for incumbent financial service providers is the classic innovators dilemma - how to focus on a potentially disruptive innovation in the right way, while dealing with the intense commercial, technology and regulatory pressures on the core business.
Having experienced similar disruption in the news industry during the first Dot.com bubble the only certainty is that it’s going to be a fascinating journey and nothing will be quite what we may envisage today.