By Michelle Dhansinghani

I’ve just returned to New York after 6 months of living in the UK, studying at the London Business School. I felt like Emily in Paris except it was Michelle in London, and instead of marketing I spent my days immersed in the fintech ecosystem.

It was during the London Fintech Happy Hour, hosted by Michael Jenkins of the This Week in Fintech Community, that I met Andre Reina. Andre is a fintech guru and Product Lead at unicorn and London start-up darling, TrueLayer. After the cocktail intros of name, place of origin, and occupation, somehow we dove into a policy discussion about the European regulation PSD2 and the massive opportunity that open banking had brought to Europe; it was an unexpected turn of events but absolutely one that I welcomed. At the time all of this seemed like a foreign language.

On the tube that night I remember a moment of realization as someone who has lived in both NYC and London. The fintech ecosystem looked and felt really different overseas, but this was the first time I started to understand that open banking was the “why” behind the outcome.

Open banking is a growing trend of providing increased transparency and access to consumer data with the goal of improving efficiency, competition and innovation for consumers.

In two leading fintech hubs, New York City and London, open banking has spawned two completely unique ecosystems. In this piece, we’ll explore the history of regulations (or lack thereof) that shape the infrastructure of each ecosystem, take a bird’s-eye look at the current state of fintech in each region, and demonstrate the usefulness of recognizing their differences.

The Story of Open Banking in the US vs. Europe

Even before we had a term for it, open banking was implemented in the US for over 20 years, ironically led by banks enabling data transparency for their customers between accounts.

To understand the history of consumer finance in the United States, I spoke to Max Bentovim of the Consumer Financial Protection Bureau (CFPB) who shared that as early as the 2000s the region was positioned to become an early fintech hub because it had some of the strongest financial institutions in the world; it was also an early adopter of the internet, and had the technical talent to catalyze its growth. The modern US fintech ecosystem that we think of today developed in the early 2010s coinciding with a broader push for fintech innovation around the world. Bentovim explained that the current state of fintech is a result of market demand and innovation moving quicker than the US government.