SEEBLOCKS.eu Interview - The Future of Open Banking and Financial Crime Prevention: Insights from Sean Murphy (The Connector) at Blockchain Ireland Week

Sean Murphy, COO at The Connector and a veteran in the FinTech industry, shared his insights on open banking, financial innovation, and the challenges facing the financial services sector during the SEEBLOCKS.eu panel at Blockchain Ireland Week 2024.

Murphy began by explaining the concept of open banking, emphasising its role in simplifying data sharing between banks and third parties. He illustrated its impact through a personal anecdote:  
 

"Before open banking, managing payments in my first job out of college was a tedious process. We had to manually download and process Excel data. Open banking now allows us to pull data directly from the bank via API, which is a huge time saver [...] for us as a small company at the time."

The EU's Role in Driving Innovation

Murphy highlighted the crucial role of EU regulations, particularly PSD2, in driving open banking adoption:

"Open banking was very much driven by EU regulations. PSD2, in particular, forced banks to open up this data to the general public [...] as a way of driving some innovation in the market."  
 

The Future: Open Finance and PSD3

Looking ahead, Murphy discussed the concept of open finance and upcoming regulations like PSD3:

"The next thing coming down the line is open finance and [...] PSD3. The plan is to expand beyond just sharing bank data. Pretty much every regulated entity is going to have the same level of API and data sharing. This should create great opportunities for people to manage their entire financial life in one place [...] in a transparent way."

The Growing Challenge of Financial Crime

Despite these advancements, Murphy expressed concern about the increasing sophistication of financial crimes in the digital age:

"The next big challenge in the financial services industry is, I suppose, the absence of cash. With more digital payments, things that used to happen in the black market are now happening inside banks [...] Frauds are getting much more sophisticated because criminals have access to every piece of technology without restrictions."

He predicted that the fight against financial crime would be a significant trend in the coming years, potentially involving advancements in device security and authentication methods.

Balancing Innovation and Compliance

Murphy also touched on the tension between innovation and regulatory compliance in the financial sector:

"I was talking to a global head of product at one of the bigger banks recently, and he was saying 98% of his job is now compliance. They don't really have an opportunity to do cool stuff; they have to do things that comply [...]"

Conclusion

As the financial services landscape continues to evolve, driven by EU regulations and technological advancements, the industry faces both opportunities and challenges. Open banking and the forthcoming open finance initiatives promise greater transparency and user control. However, the increasing digitization of financial transactions also brings new risks, particularly in the realm of financial crime. As Sean Murphy's insights suggest, finding the balance between innovation, compliance, and security will be crucial for the future of Europe's digital financial ecosystem.

WATCH THE INTERVIEW RECORDING & LISTEN TO THE RECAP INTERVIEW BELOW