Open Banking

Fintech TempCheck #2: Cryptocurrency

jonas-leupe-425132.jpg

Want to stay ahead of the game in fintech? Then kick-start your week with Foco’s ‘Fintech TempCheck’ – your insight into what’s on the minds of the sector’s top thinkers.

The format is simple: every fortnight we’ll pick one theme and ask one question. That’s it. This week’s theme is Cryptocurrency.

Our question is: 

"Lloyds Bank recently announced that they’re dumping bitcoin yet some airlines have decided to use it? Is this the end of cryptocurrency?"

Victor Cruz, MD of FinTech Talents

One of the key issues around cryptocurrency is the lack of certainty when it comes to the regulatory frameworks. Banks (and other financial institutions) operate in a highly regulated space and have been caught out and hit with increasingly large fines in recent years. It is no wonder that they are a bit risk averse when it comes to cryptocurrency and, in particular, the association between bitcoin and some unsavoury transactions. I think that regulation in this space will evolve over time and deal with some of the key issues in relation to KYC (Know Your Customer) and AML (Anti-Money Laundering) concerns.

I think the case with Lloyds is actually a bit more straight forward as the ICO (Initial Coin Offering) craze has really driven up the value of cryptocurrencies and they are clearly concerned about consumers running up huge credit card debts in an attempt to get in on the rush. If the value drops significantly and suddenly they could be faced with a large number of consumers who are unable to service that debt; not an ideal outcome. This again points to the lack of clarity around regulatory frameworks and the treatment of ICOs as assets. There is a tricky balance to be struck between allowing consumers to do what they want with their money and protecting them from poor financial decision making and investing in the absence of advice or potential fraud.

Accepting bitcoin (or another cryptocurrency) as a payment mechanism (as many retailers do) is a very different issue than the difficult question of how best to protect consumers without stifling innovation and remaining compliant. That conversation will continue to evolve but I certainly don’t think this is the end of cryptocurrency. This is an immature market and, particularly in the case of ICOs where regulation and consumer protection frameworks are still very much a work in progress.

(Connect with Victor on Twitter @CruzFintech‏)

Jamie McNaught, CEO of Solidi

What I read from Lloyds (and others) banning the use of their credit cards for purchasing cryptocurrency along with central banks and large investment banks sounding off in various guises is the incumbents beginning to get very concerned about cryptocurrencies.

This treatment by the large banks is neither new or unusual. You only need to look at the bank's resilience and attempts to derail Open Banking in the UK along with the difficulties UK fintechs have with establishing and maintaining a decent banking relationship to understand just how self serving and anti competitive the UK banking industry really is.

The genius of cryptocurrencies is that at their core they don't need the banks. The banks know this and they are terrified. Companies, such as airlines, are looking for viable alternatives to the existing uncompetitive global banking system and crypto is there to take the business.

Cryptocurrencies are not dead - far from it - they are in their infancy and the next decade they will grow far beyond what the existing banking system provides.

(Connect with Jamie on Twitter @solidifx)

 

Get the fortnightly Fintech TempCheck sent to your inbox by subscribing below.

Are you a fintech thought leader? Then email us at enquiries@foco-global.com  so we can add you to our list of sector voices – and we’ll be in touch soon. 

Want to learn more how to build a brand your customers can't resist? Then register for our seminar on the 15th of March in London right here.

Guest Blog: Open Banking

aaron-burden-64849.jpg

In last week’s Fintech TempCheck we asked some of the leading lights in fintech about the recent roll-out of Open Banking and how it’s coming along. We got a lot of great responses, so we decided to select a couple that really stood out for this week’s Guest Blog.

Louise Beaumont, co-chair of the Open Banking Working Group at TechUK

Tweet Louise  @louisehbeaumont,   @sr_   and  @techUK

Tweet Louise @louisehbeaumont, @sr_  and @techUK

 

That six of the nine banks weren’t fully ready for the initial Open Banking compliance deadline is disappointing but not entirely surprising as the January 13 date was always viewed as a ‘rolling start’ to open banking. The six-week testing phase will confirm that the open API implementations that are ready are indeed standard, and thus capable of delivering open banking as the regulator intended.
For consumers, open banking appears to be nothing more than a change of Ts and Cs and a lot of scary looking legalese around the dangers of sharing data with third parties. The communication from the banks to consumers and SMEs has been poor to date, and must improve to genuinely help people understand the opportunities available as the open data future evolves, as well as how to stay safe.
The open future starts here; consumers and small business can now start to benefit from a hyper-personalised environment, with predictive and pre-emptive services that dynamically flex and flow as financial needs change, and all based on the willingness to securely share the data they generate. That is vastly different from the financial services experience to date with monolithic banking products that are mass-marketed at - with no consideration to - the individual.
In a new world built around the smarter use of data, large holders of data such as energy and telco firms, fintechs and the tech titans could deliver financial services either individually or through collaboration. They could anticipate spending patterns and usage, comingle data from multiple sectors to surface and satisfy un-met or under-served needs. Amazon, Facebook and others have a distinct advantage as they are designed with data at their core, with a huge incumbent user base and an ability to be at the forefront of customer engagement - while training us to adopt new services.


Jamie Campbell, head of awareness, Bud

Tweet Jamie  @ JCtheOriginal

Tweet Jamie @JCtheOriginal

Well so far so... much as can be expected. It was never going to be this time bomb count-down to January 13th. That date was the day the first companies would receive their regulation and gain access to the APIs (Application Programme Interface) from banks and that was the day banks had to aim for to make those APIs available. Only one bank made the deadline: Lloyds.
So let’s talk about what we have learnt so far:
  1. Customer awareness around what Open Banking is, is still low. This is likely down to the unclear explanation from institutions, limited coverage in the build up of the launch and few relatable use-cases in the market. Finance needs to get better at bringing the rest of the population with it as it tries to make radical change.
  2. Finding out who the regulated companies are in the space is not easy. The new licences: AISP (Account Information Service Provider) and PISP (Payment Initiation Service Provider) are what gives third party access to customer data on their request, but for a normal customers, how do they find out who the regulated parties are? Currently it's case by case, looking up the FCA registration number. But if you are looking for a long list of service providers it involves downloading CSVs and cross referencing numbers with names... I did it, it ain’t pretty.
  3. More time is needed. Across the board, time is needed to test the experience of all of these services. Whether it's account aggregation or initiating payments, the only way this is going to make a big impact is if people want to use it. For people to want to use it, it needs to show value (which it does), it needs to be secure (which it is) and it needs to be easy (which, arguably, it isn’t). Time will be best spent getting the customer journeys and value propositions correct going forward.
But, it’s only a few weeks in. As the Open Banking Implementation Entity said, this is a ‘rolling start’. Let’s check back in six months.

 

Want to know what’s hot in fintech? Then check out our weekly Tech & Tonic, which covers the latest news in the industry and subscribe to our fortnightly thought-leadership series, Fintech TempCheck.

You’re a thought leader? Then email us at enquiries@foco-global.com  so we can add you to our list and we’ll be in touch.

Fintech TempCheck #1: Open Banking

jonas-leupe-425132.jpg

Want to stay ahead of the game in fintech? Then kick-start your week with Foco’s ‘Fintech TempCheck’ – your weekly insight into what’s on the minds of the sector’s top thinkers.

The format is simple: every week we’ll pick one theme and ask one question. That’s it. This week’s theme is Open Banking.

Our question is:

"Two weeks into Open Banking, what are the lessons?"

Louise Beaumont, co-chair of the Open Banking Working Group at TechUK

That six of the nine banks weren’t fully ready for the initial Open Banking compliance deadline is disappointing but not entirely surprising as the 13 January date was always viewed as a ‘rolling start’ to Open Banking.  
For consumers, Open Banking appears to be nothing more than a change of Ts and Cs and a lot of scary legalese around the dangers of sharing data with third parties. The communication from the banks to consumers and SMEs has been poor and must improve to help people understand the opportunities, as well as how to stay safe.

(Connect with Louise @louisehbeaumont, @sr_  and @techUK)

Benedetta Arese Lucini, CEO and co-founder of Oval Money

Open Banking is the beginning of a new era in which banks will increasingly leverage their strength in their distribution network and their existing infrastructure for transactions, partnering with consumer-friendly and data driven start-ups that can revolutionise the last mile delivery of financial services. Today, the consumer experience is cumbersome, but Open Banking APIs will mean a faster, easier and more seamless service across all providers.
For Oval Money, with due care for privacy laws and anonymisation of data, Open Banking will mean an enhanced experience for our users and account connectivity with the full range of banks. This will make the benefits of regular saving available to even more people with the opportunity to deliver customised solutions for groups that are often left out.

(Connect with Benedetta @OvalMoney)

Steve Tigar, CEO of MoneyDashboard

With five of the UK’s large banks being granted extensions by the Competition & Markets Authority, the introduction of the standards set out by Open Banking has, of course, been slower than consumers have hoped. This delay presents a challenge for fintechs that want to use Open Banking to provide a comprehensive service that all consumers, regardless of their bank, are able to enjoy.
While this is the case, our users have taken comfort in the increased protections now firmly established around credential-sharing with Account Information Service Providers and will continue to enjoy services like ours without fear of contention with the guidelines previously set out by some banks' T&Cs.

(Connect with Steve @SteveTigar)

Peter Myatt, co-founder of Bean

While there have been some predictable issues, for example some banks missing the implementation deadline, it is undoubtedly good to see the industry taking a crucial step towards a standardised and regulated environment in which consumers can access their account data.
It seems a number of key players, like Bean, are holding off on launching their Open Banking solutions in the early months, instead waiting to see how the standards work now they have been launched. One thing is for sure, it is going to be an exciting year.

(Connect with Peter @usebean)

Devie Mohan, CEO of Burnmark Research

I think there are two different trends emerging in Open Banking.
This is perhaps one of the best things to happen in the fintech world – several fintech firms and startups have announced new features, new capabilities and new data points in the past two weeks.
However, the customers have said that they do not care, or see a difference around Open Banking. They say they are satisfied with their current switching capabilities (fewer than 20% of banking customers in the UK switch accounts) and 10% of people in a recent survey said they would never go for a product using Open Banking (most likely due to safety and security concerns).

(Connect with Devie @Devie_Mohan)

Catherine McGuinness, chair of policy and resources at City of London

Opening up competition in the banking sector is a welcome measure and something that promises to offer consumers more choice.
We have seen through the growth of fintech, which is burgeoning in the UK, that regulatory change really can shake up a sector for the benefit of all.

(Connect with Catherine @City_McGuinness)

Get the weekly Fintech TempCheck sent to your inbox by subscribing below.

Are you a fintech thought leader? Then email us at enquiries@foco-global.com  so we can add you to our list of sector voices – and we’ll be in touch soon.

Tech & Tonic: Open Banking arrives at last and attack of the (very polite) robots

jez-timms-60285.jpg

 

What's been happening in the world of fintech this week? Glad you asked. Pour yourself a glass of something nice and read on.

The dawn of Open Banking

The big news in fintech this week is, of course, that much-awaited regulatory change (no, don't switch off; it's actually INTERESTING) - Open Banking. Not an expert? Well, one of the tastiest explainers was from Business Insider's Oscar Williams-Grut. It featured our client, Bean, as well as wise words from the seemingly ubiquitous Samantha Seaton of Moneyhub, Christoph Riech of iwoca, Ed Maslaveckas from Bud and Imran Gulamhuseinwala, a partner at accountant EY. Are we entering a revolution in the way we manage our personal finances?

How PR robots are disrupting banking

Ever had a lovely long chat online with a bank or insurer, only to realise you were chewing the fat with a piece of code? It turns out chatbots are so good in 2018 that they can sometimes be as good at handling customer conversations as we humans. There's some great commentary from economic anthropologist Brett Scott in this piece by Clea Bourne on The Conversation.

Getting in Tandem with Harrods

Start-up lender Tandem has completed its acquisition of Harrods bank adding 21,000 new customers and £80m of capital, according to the Daily Telegraph.

Chief executive appointed for fintech Scotland

Stephen Ingledew has been appointed as the new chief executive to promote the fintech sector in Scotland. The move will apparently "play a crucial role in cementing Scotland’s position as a world-leader in fintech".

 

How Open Banking could expose your fowl obsession

Op-hen Banking: it's coming home to roost

Op-hen Banking: it's coming home to roost

By Michael Taggart

Picture it: it’s a quiet afternoon in the office in late 2019 and you’re putting the finishing touches to yet another hilarious Facebook post – a video of your turtle, Leonardo, in a fedora, playing modern jazz on a tiny piano.

It’s going to get at least 12 likes, you tell yourself, leaning smugly back into your chair, when a notification suddenly pops up on your desktop computer and the colour drains urgently from your cheeks.

“NatWest Bank – monthly subscription – Fancy Fowl magazine – minus £6.50”

Panicking about the prospect of your colleagues discovering your secret ambition to be a poultry fancier, you tug every cable out the back of your machine and the screen goes blank.

Phew. Your obsession with Bearded Bantoms, waterfowl and turkeys will remain private. For now.

For me, this scenario – or something similar, anyhow – is quickly shapeshifting from a childish nightmare into a clear and present danger as we approach the implementation of the PDS2 and Open Banking requirements in the New Year.

"The major social networks might see this as a route into financial services"

These overlapping regulations – the former originates in the EU, while the latter is British – will force the banks to open up customer data to third parties in the form of secure APIs, creating more choice on where and how consumers manage their money.

It is surely not fantastical to suggest the major social networks might see this as a route into financial services, enabling people to manage their money at the same time as polluting the digital universe with jpegs of their children.

Perhaps this is a good thing? It certainly seems like a great step on the road to total customer convenience. But what about security? I’m forever leaving my Facebook page unattended and open at work. I often carelessly discard my phone as I make tea or coffee. I’ve been fraped more than once.

It was with these vexing questions bouncing chaotically around my tormented mind that I took my seat at the Kairos Society UK’s Christmas meet-up, entitled: “The Future of Fintech”.

I was particularly keen to hear the pre-trailed talk from Vedika Jain, of TrueLayer, a company that builds the APIs that will enable this Brave New World of Open Banking and PDS2.

“It goes against intuition – don’t give people access to your account”

Vedika gave as good a summary as I have heard of the likely results of the new regulations, describing an era of “the unbundling of bank services, with new firms doing only one thing but doing it really well”.

She described how personal “money control centres” are now possible. As are apps that notify you about switching and saving opportunities on regular payments (our client, Bean, does just this) and, of course, notifications about your bank account via Facebook.

“It goes against intuition – don’t give people access to your account,” Vedika acknowledged towards the end of her talk. But security is being taken seriously by this sector, for example with the deployment of encrypted information and secure storage.

I left the event optimistic about the volcano that is about to explode in UK consumer financial services. People will suddenly see a wave of exciting apps that are not only usable – but fun. It will become far, far easier for people to manage their money.

And that’s got to be a clucking good thing, right?

Oh dear.

 

Photo by Ashes Sitoula on Unsplash