Rojin Nair, Advisor
June 1st, 2021
At Incyub8 Inc, Rojin is focusing on nurturing and guiding various national and international start-[...]
Category Archives: Digital, NEO, Open Banking, Open Finance
Canada’s Open Banking Journey: Interview with Steve Boms, Executive Director Financial Data and Technology Association – North America “FDATA”
NCFA Canada | Mahi Sall | Dec 5, 2022
Thought Leadership Series of Expert interviews and insights related to a made-in-Canada open banking regime
The National Crowdfunding & Fintech Association of Canada (NCFA), true to its mission of providing education, industry stewardship, networking, growth, and funding opportunities for innovative financial technologies and related sectors, is pleased to launch a brand new thought leadership series on Open Banking led by Berlin-based NCFA ambassador and independent expert in Fintech-Bank Partnerships Mahi Sall.
NCFA is proudly contributing this thought leadership series to help shape a system that will bring profound changes in how financial services will be created, distributed, and consumed in Canada over decades to come. Our hope is that Canada’s Open Banking system will improve economic outcomes, improve market efficiencies and competitiveness, and enable consumers to access new and innovative financial services in a way that is secure, efficient, and consumer-centric.
The series is called ‘Canada’s Open Banking Journey’ and aims to aggregate international and domestic perspectives of Open Banking/Finance expert practitioners from around the globe to advance dialogues, key considerations, and explore potential solutions for the development of a made in Canada open banking regime with the following timeline:
- Sep 2018: Canada’s Open Banking journey officially began when the government established a multi-stakeholder Advisory Committee tasked to conduct a review into the merits of Open Banking
- Apr 2021: Advisory committee publishes final recommendations
- Mar 2022: Government appoints Abraham Tachjian – PwC Canada as Canada’s Open Banking lead responsible for convening industry, government and consumers in designing the foundation of the system of Open Banking for a launch in 2023.
- Oct 2023: Phase 1 implementation expected
NCFA Canada's Open Banking Journey Series:
Interview Begins
”As the government advances critically important initiatives to modernize Canada’s financial services market, including open banking and payment modernization, the voices of consumers and small businesses must be at the center of the conversation”.
-- Steve Boms, Executive Director Financial Data and Technology Association - North America “FDATA”
Mahi Sall: Please tell us about yourself and FDATA North America
Steve Boms: Steve Boms, Executive Director FDATA North America, Founder & President of Allon Advocacy LLC.
FDATA North America was founded in early 2018 by several financial firms whose technology-based products and services allow consumers and small and medium enterprises (“SMEs”) to improve their financial wellbeing.
We are a regional chapter of FDATA Global, which was the driving force for Open Banking in the United Kingdom, and which continues to provide technical expertise to policymakers and to regulatory bodies internationally that are contemplating, designing, and implementing open finance frameworks. With chapters in North America, Europe, Australasia, Latin America, and India, FDATA Global has established itself as an expert in the design, implementation, and governance of open finance standards and frameworks globally since its inception in 2013.
We count innovative leaders such as the Alliance for Innovative Regulation, APImetrics, Basis Theory, Betterment, BillGO, Codat, Direct ID, Equitable Bank, Envestnet Yodlee, Experian, Finansytech, Fiserv, Flinks, Hank Payments, Interac, Intuit, Inverite, Kabbage, Mogo, Morningstar, M Science, MX, Petal, Plaid, Questrade, SaltEdge, Trustly, ValidiFi, Vaultree, VoPay, Wealthica, and Xero, among others, as our members.
Mahi Sall: Chief among the factors affecting the take-off of Open Banking is low adoption by consumers. What could Canada do differently than other jurisdictions in order to pre-empt this risk?
Steve Boms: I would respectfully disagree with the premise of this question. Millions of Canadians are already using open finance tools today offered by dozens of FDATA North America member companies. At last count, in excess of five million Canadians were utilizing open finance tools offered by just our members in Canada. Moreover, open finance is not itself the product; it is the rails upon which products and services are offered to consumers. Said another way: Canadians are already benefiting from open finance. The implementation of a formalized open finance regime is a means of providing ubiquitous access to open finance tools regardless of the financial institution with whom one banks.
Mahi Sall: Speak about Open Banking limitations and the most common misconceptions people have about it?
Steve Boms: Open finance’s ability to spur innovation and competition is almost entirely limited by how policymakers design, implement, and ultimately govern their open finance systems. The technological barriers to consumer control of data are minimal and decreasing by the day, particularly as APIs and other modern data communication systems are rolled out across various sectors of the economy. That’s basically why FDATA exists- to be a strong, vigilant advocate for open finance’s potential to the very policymakers who will determine its form and function.
Perhaps the most common misconception of open finance is that it will inherently present a cybersecurity risk to banks and data holders. However, we have stressed since our inception that this risk has so far been entirely speculative, and there are no examples of data breaches in open finance frameworks – formalized or otherwise – due to a third-party data sharing relationship with a fintech. To further address this concern, we have also repeatedly advocated, mostly through comment letters to regulatory agencies, that third party fintech providers should be entirely responsible for all elements of cybersecurity, due diligence, regulatory compliance and consumer protection- and are perfectly capable of doing so. In fact, we are opposed to the idea of banks and data holders retaining responsibility or liability for such damages, since this provides them the pretext to arbitrarily limit data access, and cut it off in some extreme cases. The details of how third party providers must go about ensuring privacy, data, and cybersecurity will be properly developed through an accreditation process. Once such process is devised, any accredited third party financial provider should have continuous access to customer-permissioned data from any and all Canadian banks that participate in the open finance system.
Mahi Sall: In the early days of Open Banking some European banks provided in addition to APIs a Modified Customer Interface (MCI) as alternative means for third party providers (TPPs) to get access to customer data. Would you foresee the need for Canadian banks to deploy fallback options? If so, what could be some of the alternatives?
Steve Boms: Yes. Any realistic view of open finance in Canada must consider the need for fallback options. The vast, overwhelming majority of customer-permissioned financial data sharing in Canada currently occurs via credential-based screen scraping. While all stakeholders in the market would prefer to transition to token-based APIs, it is unrealistic to imagine that 100% of data access will quickly transition to this data access method. Accordingly, fallback options will need to remain.
The harsh reality is that Canada’s financial system is not yet ready to eliminate existing technological methods of accessing customer data without massive detriments to consumer financial health. This is a lesson clearly learned from other, more advanced markets like the United Kingdom, which retain screen scraping as a connectivity method either as a fallback option or for data not available through APIs. In the absence of a fully developed, robust API environment, screen scraping is a necessary tool to enable universal consumer and SME data access.
“ Regulatory certainty and clarity will be key to ensuring that this new open finance marketplace develops to its maximum potential.”
Mahi Sall: What must be thought of and accounted for at this early stage of Open Banking in Canada in order to ensure compatibility and interoperability at regional/international level?
Steve Boms: Regulatory certainty and clarity will be key to ensuring that this new open finance marketplace develops to its maximum potential. We have been working with Canada’s independent banking regulator the Office of the Superintendent of Financial Institutions (OSFI) to ensure that their efforts to modernize third-party risk management do not interfere with open finance development. Since the open finance accreditation standards in Canada will almost certainly include cybersecurity requirements for third-party providers, harmonization of efforts between the Department of Finance’s open finance work and OSFI’s approach to third-party cybersecurity risk will therefore be essential. We’ve also urged OSFI to clearly distinguish between what it considers to be bank third party providers under its supervisory guidelines from what will soon be accredited open finance participants to avoid any confusion.
“Half of Canadians feel stress when interacting with Canada’s financial services sector.”
Mahi Sall: Any final thoughts?
Steve Boms: We recently commissioned a landmark survey of Canadian consumers along with Paytechs of Canada to measure attitudes toward the existing financial services marketplace and open banking. It found that more than half of Canadians feel stress when interacting with Canada’s financial services sector and believe they would benefit from increased competition and transparency in the financial services market. The findings indicate this is especially true among women, young people, and new Canadians. Among the biggest sources of dissatisfaction are high fees and a lack of choice.
As the government advances critically important initiatives to modernize Canada’s financial services market, including open banking and payment modernization, the voices of consumers and small businesses must be at the center of the conversation. These first-of-their-kind surveys clearly demonstrate Canadians’ hunger for a more competitive, transparent, and innovative Canadian financial system.
# # #
Links you may be interested in:
Mahi Sall is an Ambassador of the National Crowdfunding & Fintech Association of Canada “NCFA”, and an Expert on Fintech-Bank Partnerships. He is based in Berlin, Germany.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Support NCFA by Following us on Twitter!Follow @NCFACanada  |
Why RPA Is Key To Fintech Growth
Guest Post | Nov 30, 2022
Image: AdobeStock
It’s without a doubt how technological advancements are revolutionizing how industries operate today. For instance, in the financial industry, there’s notable growth in terms of computer processing capabilities. And among the innovations today is Robotic Process Automation (RPA).
What Is Robotic Process Automation (RPA)
Robotic process automation refers to technology or software used to streamline rule-based or repetitive processes and workflow commonly carried out by humans. With such tools, companies can save time, money, and resources through automation in production and other operations. Customers, meanwhile, could also benefit from improved accuracy, efficiency, and service quality.
RPA is gaining traction across telecommunications, customer service, manufacturing, and healthcare industries. Apart from these, RPA is also utilized in finance, particularly in various Fintech developments and applications. From traditional banking to blockchain technology, RPA is now widely used in the financial industry. With continued developments, automation can propel Fintech to further growth in the long run.
If you’d like to know why RPA is key to Fintech growth, continue reading this article.
1. Can Open More Business Opportunities
The banking and finance sectors have become increasingly competitive, including interest and approval rates, banking convenience, and customer service. Thanks to automation, what used to be hurdles in traditional banking services and processes can now be minimized, if not completely eradicated.
For instance, RPA can allow a hassle-free application process for a startup business line of credit. Compared to how complex it was to apply for a bank loan a few decades past, startup owners at present need only to access digital banking apps and explore their credit options. The approval process can also be sped up from a couple of hours to several days.
New business through loans and credits is just one of the many examples of how RPA can help propel banking and finance to further growth. As technology only continues to develop, it’s up to the companies to use RPA to their advantage and think of new financial solutions they can offer to their customers.
2. Boosts Efficiency And Accuracy
One of the main advantages of RPA is its ability to streamline operations in various ways. Automated transactions can be made simple, quick, convenient, and accurate. They can also be an effective way to trim down operation costs, optimize time, and manage resources more effectively, allowing your employees to work and focus on other essential functions of the firm. Overall, RPA can boost the operational efficiency and productivity of the banking and finance industry.
In addition to efficiency, there could also be an increase in accuracy since RPA software can also help minimize human errors attributed to the employee’s lack of knowledge, confusion, or carelessness. After all, regardless if the mistake is minor or substantial, errors in accounts can lead to significant consequences, such as a decrease or increase in profits due to financial statement inaccuracy. However, by getting RPA services from 1Rivet or other providers, these can be reduced since common and repetitive tasks like data entry can be streamlined and automated, resulting in lower operational risks.
3. Enhances Customer Experience
Image: AdobeStock
RPA offers many advantages to companies or businesses, but customers could also benefit from automation because it enhances their overall experience.
For one, since internal workflow and operations can be streamlined, employees can allocate their time and focus on other tasks, like customer support. This means that instead of performing administrative and other repetitive functions, they can have more time to attend to and address customer concerns and queries.
Moreover, since customer service is time-consuming and demanding, RPA can also be beneficial in automating customer support functions. RPA can help improve communication and interactions between banks and their customers. This means it’s become more accessible for clients to reach out to financial companies for queries and other concerns through chatbots or automated voice machines. Meanwhile, companies can send thousands of messages in minutes through automated chat and email.
4. Supports Financial Crime Prevention
Cyber fraud and other financial crimes like wire transfer fraud have become significant hurdles to Fintech’s growth. This is especially since, as technology develops, hackers have also enhanced their efforts to access digital assets and funds in various forms illegally. Because of this, it’s crucial for banks and financial institutions to use RPA.
Digital processing of transactions offers improved accuracy regarding checking credentials and authorization. This can help minimize and prevent human error, which is why automated processes can help prevent financial crimes. Aside from accuracy, RPA also makes it possible to detect fraud quickly and more effectively. Bots can see patterns if there are any suspicious activities and notify the proper authorities as they happen.
See: The Enterprise Automation Imperative—Why Modern Societies Will Need All the Productivity They Can Get
Financial protection is vital to many Fintech developments, including blockchain technology, DeFi, and newer ones that have yet to hit the market. Fintech’s marketability significantly relies on public trust. And through RPA, these financial platforms can display their credibility to their investors and other stakeholders.
Conclusion
RPA has allowed banking and finance to grow and remain competitive amidst technological advancements. For one, automation opens business opportunities, boosts efficiency, improves customer experience, and supports financial crime prevention. With all of these in mind, RPA becomes the future of Fintech because of its many advantages and opportunities.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Support NCFA by Following us on Twitter!Follow @NCFACanada |
Canada’s Open Banking Journey: Interview with Stephane Nouy, Co-Founder Moneythor (HQ: Singapore)
NCFA Canada | Mahi Sall | Nov 28, 2022
Thought Leadership Series of Expert interviews and insights related to a made-in-Canada open banking regime
The National Crowdfunding & Fintech Association of Canada (NCFA), true to its mission of providing education, industry stewardship, networking, growth, and funding opportunities for innovative financial technologies and related sectors, is pleased to launch a brand new thought leadership series on Open Banking led by Berlin-based NCFA ambassador and independent expert in Fintech-Bank Partnerships Mahi Sall.
NCFA is proudly contributing this thought leadership series to help shape a system that will bring profound changes in how financial services will be created, distributed, and consumed in Canada over decades to come. Our hope is that Canada’s Open Banking system will improve economic outcomes, improve market efficiencies and competitiveness, and enable consumers to access new and innovative financial services in a way that is secure, efficient, and consumer-centric.
The series is called ‘Canada’s Open Banking Journey’ and aims to aggregate international and domestic perspectives of Open Banking/Finance expert practitioners from around the globe to advance dialogues, key considerations, and explore potential solutions for the development of a made in Canada open banking regime with the following timeline:
- Sep 2018: Canada’s Open Banking journey officially began when the government established a multi-stakeholder Advisory Committee tasked to conduct a review into the merits of Open Banking
- Apr 2021: Advisory committee publishes final recommendations
- Mar 2022: Government appoints Abraham Tachjian – PwC Canada as Canada’s Open Banking lead responsible for convening industry, government and consumers in designing the foundation of the system of Open Banking for a launch in 2023.
- Oct 2023: Phase 1 implementation expected
NCFA Canada's Open Banking Journey Series:
Interview Begins
“It is important to help banks understand the benefits and use cases that they can build on top of Open Banking.”
-- Stephane Nouy, Co-Founder Moneythor (HQ: Singapore)
Mahi Sall: Please tell us a bit about yourself?
Stephane Nouy: Stephane Nouy, co-founder of Moneythor, Chief Client Delivery Officer and Managing Director Europe.
Moneythor powers Open Banking use cases in several countries and across various regimes such as Europe (PSD2), Australia (CDR) and Singapore (SGFinDex) enabling banks and fintech firms to offer improved functionality and experience to their retail & business customers through their digital banking services.
The Moneythor solution has been deployed globally by large banks such as ANZ, CIMB, DBS and Standard Chartered among others, fintech firms such as Raiz as well as digital banks such as Orange Banque. It supports Open Banking natively.
Powered by real-time data analytics and behavioural science techniques, the prime focus of the Moneythor solution is in the delivery of data-driven personalized, contextual and actionable recommendations, insights and nudges to end-users, preconfigured or uniquely crafted by the financial institutions. Examples of these include money management features, budgets, goals, automated savings alerts, predictive forecasts, financial literacy material, relevant offers and more.
Mahi Sall: Common Rules represent a key component of Open Banking System Design, with the premise that they create a level playing field which eliminates the need for bilateral arrangements between Open Banking participants.
Speak about situations that would call for bilateral arrangements in an open banking environment that thrives on common rules.
Stephane Nouy: More than bilateral arrangements, what we often see is a situation whereby the Open Banking common rules do not cover the full spectrum of banking data (ex: PSD2 not including all types of accounts), forcing aggregators and Open Banking data consumers to continue using scraping techniques. This should encourage the Open Banking regulation to include a broader set of financial data.
Mahi Sall: Another key component of Open Banking System Design is the Accreditation Process. Canada’s Advisory Committee on Open Banking recommended to exempt federally regulated banks from the accreditation process, and similar consideration for provincially regulated financial institutions to be discussed.
What major frustration points relative to the accreditation process can be anticipated and how to address them?
Stephane Nouy: If some banks are exempted from the mandatory opening of their data through standard-based Open Banking APIs, the aggregation process will be tempted to continue relying on scraping techniques.
Compliance with Open Banking is still too often seen by banks as a regulatory effort more than a commercial opportunity, adding to their technical roadmap with no clear return on investment. It is important to help banks understand the benefits and use cases that they can build on top of Open Banking, and thus transform this regulatory requirement into a business opportunity.
Mahi Sall: The third key component of Open Banking System Design are Technical Specifications & Standards with two approaches currently dominating the landscape: single standard approach (e.g. UK, Australia) and multiple standards (e.g. US, EU). Canada’s Advisory Committee left both approaches open for exploration. Can you speak to the advantages and shortcomings of these approaches?
Stephane Nouy: Although the EU allows multiple technical standards, they all comply with the same rules and functional coverage. This doesn’t impact the services built on top of Open Banking, it instead offers more technical flexibility allowing the banks to select and work with their preferred technical partner.
Mahi Sall: What are some of the lessons you’ve learned in terms of Open Banking test designs and implementation.
Stephane Nouy: The experience in the EU clearly shows that the banks were late in complying with the PSD2 Open Banking directive, and that Third Party Providers (TPPs) therefore struggled to perform their tests and roll out their solutions. TPPs also faced multiple bugs and issues when attempting to consume the banks’ APIs, and they suffered from this. They are however instrumental in the success of any Open Banking ecosystem, and their work should be facilitated more than we’ve seen with the PSD2 roll-out in Europe. For instance, building a sandbox with a set of automated tests that the banks should connect to and that would guarantee the correct deployment of their APIs would be an interesting step to minimize the issues encountered by TPPS in their implementations.
Mahi Sall: As in other jurisdictions, financial inclusion is high on Canada’s Open Banking agenda. Please share examples where Open Banking failed to deliver on this metric.
What are some of the key lessons learned that Canada could benefit from?
Stephane Nouy: Financial inclusion has not always been a primary objective of Open Banking, with the initial services developed on top of Open Banking clearly targeting digital savvy and multi-banked consumers. An initial use case of Open Banking has often been around credit assessment and scoring, for example to support the seamless approval of a loan or BNPL proposition, again not particularly focused on financial inclusion, although easier access to credit is a useful feature within this segment too.
You may want to check the “Cresus – BGV (Budget Grande Vitesse)” initiative in France, promoting financial inclusion and financial education. It helps connect banks, identify recurring income and expenses easily, manage budgets, track the available balance and the end of month projection, and calculate the social aids being available.
Mahi Sall: Chief among the factors affecting the take-off of Open Banking is low adoption by consumers. What could Canada do differently than other jurisdictions in order to pre-empt this risk?
Stephane Nouy: Multiple factors can explain the low adoption (non-exhaustive list):
- Banks are usually lobbying for increased security, which can lead to a slower or limited adoption. E.g.: if the user needs to update their credentials or provide their consent too often, she may be tempted to abandon the service.
- Users may be afraid of sharing their credentials with a TPP. More public communication and explanation could be provided by the authorities on the service and the certified participants.
Mahi Sall: Drawing upon your observations, what are some of the quick wins in terms of Open Banking use cases that banks and fintechs should prioritize rolling out?
Stephane Nouy: Digital banks are usually not the primary bank of their clients, this limits the level of services and personalization that they can provide. Through Open Banking, they can access all their customers’ transactions and therefore provide them with insights, recommendations and nudges relevant to them.
Credit scoring (based on Open Banking data analysis) is also one of the top use cases deployed.
Money transfer across banks through Open Banking is also a use case that we see more and more, allowing fintechs to propose advanced solutions without the bottleneck and limitation of a complex fund transfer process through the existing (complex and expensive) payment flows and channels.
Cashback services and/or personalized merchant offers are also another use case developed on top of Open Banking data, offering good incentives for the customers to share their data.
Mahi Sall: What role does talent play in developing a thriving Open Banking system?
Stephane Nouy: Talent is critical to invent and develop the best use cases and boost the Open Banking adoption. We believe that the regulator should provide strong support to the fintech ecosystem (e.g.: strong guidance for the TPP enablement process, so that fintech can stay focused on their specific functional use cases).
Mahi Sall: Speak about Open Banking limitations and the most common misconceptions people have about it?
Stephane Nouy: As mentioned previously, the security restrictions imposed by the banks (eg: changing credentials or providing consent too often) can really kill the fluidity of the use cases invented by TPPs and thus the Open Banking adoption.
Limitations will happen whenever data is missing in the Open Banking specifications (eg: not all accounts, MCC codes for the transactions).
“ It’s undeniable that Open Banking is a game changer in the way financial services are offered to consumers and businesses.”
Mahi Sall: What does Open Banking mean to banks and fintechs, and how does it affect the relationship between the two?
Stephane Nouy: Traditional banks clearly see Open Banking as a threat of being disintermediated, while this is a great opportunity for fintechs. This leads to a conflictual relationship (except when the fintech sells its services to help the bank innovate).
Please note that:
- Digital banks would also see an opportunity in Open Banking.
- Credit scoring (based on Open Banking) use cases is something that traditional banks may find useful for their consumer credit activities.
- We have seen lots of consolidation scenarios, where the banks would invest in the top TPPs.
Mahi Sall: How could banks and TPPs best prepare for Open Banking and extract the most value out of it?
Stephane Nouy: Rather than a defensive attitude, banks should embrace Open Banking, and try to lead the game by providing value-added services to their customer base e.g. personalization based on the 360 degree analysis of the customers’ spendings, etc.
As noted previously, we have seen lots of consolidation scenarios, where the banks would invest in the top TPPs.
Mahi Sall: Given the very tight schedule of Canada’s Open Banking roadmap, where do you think the balance must be struck to meet deadlines without significant trade-offs?
Stephane Nouy: A strong follow-up of the banks’ progress should be performed, the rest of the Open Banking stakeholders (TPPs and fintechs) is indeed dependent on this.
A strong lobbying from the different actors should be anticipated, we recommend carefully listening to TPPs, they are not only instrumental for the Open Banking deployment, but also the experts who will immediately identify the bottlenecks and technical problems.
See: NCFA Open Banking Implementation Risks with Senator Colin Deacon and Mahi Sall
Mahi Sall: In order to ensure compatibility and interoperability at regional/international level, what must be thought of and accounted for at this early stage of Open Banking in Canada?
Stephane Nouy: Interoperability is today only seen in specific zones (eg: EU), and hardly between different Open Banking jurisdictions. Some thoughts:
- Problematic of the schema compatibility : by anticipation Canada should build upon the existing Open Banking deployment and have a compatible schema.
- Data residency: this can be a limitation for international interoperability.
# # #
Links you may be interested in:
Mahi Sall is an Ambassador of the National Crowdfunding & Fintech Association of Canada “NCFA”, and an Expert on Fintech-Bank Partnerships. He is based in Berlin, Germany.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Support NCFA by Following us on Twitter!Follow @NCFACanada |
Canada’s Open Banking Journey: Interview with Brenton Charnley, CEO and Founder of Open Finance Advisors, Australia (Ex-TrueLayer ANZ CEO)
NCFA Canada | Mahi Sall | Nov 23, 2022
Thought Leadership Series of Expert interviews and insights related to a made-in-Canada open banking regime
The National Crowdfunding & Fintech Association of Canada (NCFA), true to its mission of providing education, industry stewardship, networking, growth, and funding opportunities for innovative financial technologies and related sectors, is pleased to launch a brand new thought leadership series on Open Banking led by Berlin-based NCFA ambassador and independent expert in Fintech-Bank Partnerships Mahi Sall.
NCFA is proudly contributing this thought leadership series to help shape a system that will bring profound changes in how financial services will be created, distributed, and consumed in Canada over decades to come. Our hope is that Canada’s Open Banking system will improve economic outcomes, improve market efficiencies and competitiveness, and enable consumers to access new and innovative financial services in a way that is secure, efficient, and consumer-centric.
The series is called ‘Canada’s Open Banking Journey’ and aims to aggregate international and domestic perspectives of Open Banking/Finance expert practitioners from around the globe to advance dialogues, key considerations, and explore potential solutions for the development of a made in Canada open banking regime with the following timeline:
- Sep 2018: Canada’s Open Banking journey officially began when the government established a multi-stakeholder Advisory Committee tasked to conduct a review into the merits of Open Banking
- Apr 2021: Advisory committee publishes final recommendations
- Mar 2022: Government appoints Abraham Tachjian – PwC Canada as Canada’s Open Banking lead responsible for convening industry, government and consumers in designing the foundation of the system of Open Banking for a launch in 2023.
- Oct 2023: Phase 1 implementation expected
NCFA Canada's Open Banking Journey Series:
Interview Begins
To make Open Banking successful it must be done through mandated regulation first for innovation to happen.
-- Brenton Charnley, CEO and Founder of Open Finance Advisors, Australia (Ex-TrueLayer ANZ CEO)
Mahi Sall: Please tell us a bit about yourself.
Brenton Charnley: Brenton Charnley is the CEO and Founder of Open Finance Advisors, an Australian based consultancy specialising in the Consumer Data Right, Open finance and Open banking in Australia. Brenton is also the Founder of Open Finance ANZ the leading community of innovators furthering open finance in Australia and ex-CEO of TrueLayer ANZ.
Mahi Sall: The premise behind common rules is that they create a level playing field which eliminates the need for bilateral arrangements between Open Banking participants. On the other hand, bilateral arrangements are said to be a catalyst for more innovation.
What are your thoughts in terms of striking the balance between fostering innovation and creating a level playing field in financial services through Open Banking?
Brenton Charnley: Having experience working on both sides of the ‘innovation fence’ that is inside a large regulated financial services organization and on the outside working for innovators in fintech and insurtechs, I have lived and breathed the opportunities on both sides. The reality is, if you already have a large core (and regulated) business, you and your shareholders will do what they can to protect it. I therefore believe to make Open Banking successful it must be done through mandated regulation first for innovation to happen. For if nothing needs to change, then why change? We have seen this play out first hand in Australia with the Consumer Data Right. Even with mandated regulations, it has taken over 4 years to get to a stage of ‘good’ coverage of regulated data access. Compare this to New Zealand which has bi-lateral agreements, and sadly there isn’t enough coverage to justify it as a success just yet.
Mahi Sall: Canada’s Advisory Committee on Open Banking recommended to exempt federally regulated banks from the accreditation process, and similar consideration for provincially regulated financial institutions to be discussed, while all third-party providers (TPPs) will be subject to accreditation.
What major frustration points relative to an Open Banking Accreditation Process can be anticipated and how to address them?
Brenton Charnley: The fundamental challenge that Australia has experienced with the Consumer Data Right is the balance required between regulated data access and the need for information security to protect the consumers data and the privacy laws which define who can access and what can be done with the data. The data is ultimately leaving a highly regulated and secure environment and therefore it should go to a comparatively secure environment, correct? Well it really isn’t that simple. To hold early adopters and innovators to the same or similar technology and information security standards as highly profitable, large and regulated banks creates unnecessary barriers to entry for market participants.
In addition to these challenges, the access models under the Consumer Data Right were not fit for purpose at launch and needed to be amended to extend for different use cases and participants. This has caused a lot of complexity and a “wait and see” approach over the last two years meaning that participation has been low.
To address these challenges, I’d recommend learning from the experiences of both the PSD2 environment and CDR. Then, look to identify simple use cases and accreditation pathways to get started with regulated data sharing. Further, it is necessary to divorce the Privacy Standards from the Open Banking Standards to ensure that the regulations, and therefore accreditation, is not overly restrictive. In addition, having a principles based approach would help get moving instead of having an overly prescriptive compliance framework.
Mahi Sall: Two approaches to technical specification development currently dominate the open banking landscape: single standard approach (e.g. UK, Australia) and multiple standards (e.g. US, EU). Canada’s Advisory Committee left both approaches open for exploration given a lack of consensus by stakeholders.
Speak to the advantages and shortcomings of the approach you are most familiar with.
Brenton Charnley: Having experience only with the Consumer Data Right I can only advocate for a single standard approach. That being said, in our experience even with a single standard adherence to those standards varied greatly. Therefore, I would recommend against multiple standards.
Mahi Sall: Low adoption by customers is often cited as a key limiting factor to the take-off of Open Banking.
What could Canada do differently than other jurisdictions in order to pre-empt this risk?
Brenton Charnley: This is correct. From Australia’s experience two years in, we have seen limited consumer adoption. I’d recommend accelerating the participation of intermediaries and early adopters to get use cases into market. It should not be left to the banks to add ancillary data sharing services to their existing products. The UK had a successful innovation competition to help incentivise participation, this could also be done.
I’d also recommend absolute transparency on the consumer participation numbers (e.g. number of completed consents). As an industry the north star metrics must be the number of consumers using it, else it can’t be seen as a success.
Mahi Sall: Drawing upon observations in your and other jurisdictions, what are some of the quick wins in terms of Open Banking use cases that banks and fintechs in Canada should prioritize rolling out?
Brenton Charnley: The top three would be personal finance management, account verification especially for payments and loan applications.
Mahi Sall: What role does talent play in developing a thriving Open Banking system?
Brenton Charnley: Open banking will thrive on an already working fintech, payments and financial services community. If the talent is strong here, then you should see innovators in these sectors look to adopt open banking as ancillary innovation.
No one says I want to “do open banking”, they just want it to be easier.
Mahi Sall: Speak about Open Banking limitations and the most common misconceptions people have about it?
Brenton Charnley: I used to laugh about this and the typical “bbq chat” where people ask what you do. Having to explain what open banking and APIs are, often resulted in some blank faces. But the reality is, consumers don’t care as open banking is not the “job to be done”. The job to be done is make consumer experiences easier and embedding open data in those experiences to make it seamless. No one says I want to “do open banking” they just want it to be easier.
Mahi Sall: What does Open Banking mean to banks and fintechs, and how does it affect the relationship between the two?
Brenton Charnley: There is clearly a tension between the two. However, there is a clear interdependency here. Fintechs can’t facilitate access to open banking without compliance from the banks to the data regulations.
Mahi Sall: How could banks and TPPs best prepare for Open Banking and extract the most value out of it?
Brenton Charnley: To get the most value out of open banking both parties need to identify consumer use cases that deliver better experiences. Therefore I’d recommend both to undertake use case discovery and identify the pain points their customers have and where open data can best relieve those pain points.
Mahi Sall: Given the very tight schedule of Canada’s Open Banking roadmap, where do you think the balance must be struck to meet deadlines without significant trade-offs?
Brenton Charnley: Learning from Australia the trade-offs need to be starting small on the use cases, broader access to enable participation and to deal with non-compliance on a case by case basis over time.
See: So what is financial exclusion in the era of Open Finance?
Mahi Sall: In order to ensure compatibility and interoperability at regional/international level, what must be thought of and accounted for at this early stage of Open Banking in Canada?
Brenton Charnley: Having worked across both PSD2 and the CDR interoperability was not possible. Open banking needs to be successful at home first so I’d recommend starting there.
Mahi Sall: Banks deploy significant upfront investments in order to become Open Banking ready/compliant, which begs the question of return on investment (ROI).
What is your experience in terms of how banks have been reconciling the need for a substantial, fast return on that investment vs providing affordable, secure and innovative solutions to consumers & SMEs?
Brenton Charnley: As mentioned earlier, banks have been regulated in Australia to share data and therefore I suspect it wasn’t an ROI decision, but that of compliance. That being said, given the investment made, banks should be turning their eye to how to turn this into value. We haven’t seen a large number of banks do this just yet however.
Mahi Sall: Fraud is a major concern in financial services. Does Open Banking bring new types of financial and non-financial risk?
Brenton Charnley: I don’t think so. Continuing with the existing non-regulated data sharing models is of higher risk.
Mahi Sall: Taking a long-term view on Open Banking Governance, what are some of the key lessons learned in Australia and abroad that you’d recommend Canada to consider?
Brenton Charnley: Think I have covered a lot of these above!
Interview: Senator Colin Deacon on Open Finance in Canada: Governance
Mahi Sall: Any final thoughts?
Brenton Charnley: Please check out the last TrueLayer report on Australia and what needs to be done to improve. This is a good insight on what Canada can learn from, including ensuring there is an implementation entity!
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Links you may be interested in:
Mahi Sall is an Ambassador of the National Crowdfunding & Fintech Association of Canada “NCFA”, and an Expert on Fintech-Bank Partnerships. He is based in Berlin, Germany.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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EmFi Fueled by Cloud-based Infrastructure | KPMG Fintech Pulse H1 2022
KPMG | Scott Huie and Craig Thomason | Nov 21, 2022
As digital technologies advance to meet increasingly sophisticated customer expectations, Embedded Finance (EmFi) makes banking capabilities from payments to offers for credit available through more access points. Retailers, platforms and B2B Corporates can embed financial services in a much wider range of consumer and commercial settings.
- Embedded finance – like so many other digital banking innovations – relies on contemporary core banking technologies.
- Multiple use cases now demand such change: new core technology will sustain innovation such as predictive balance recognition, delayed payments authorization, contextual behavior modeling used to deliver compelling point of sale offers and real time banking services that are either event driven or predictive in their nature.
See: McKinsey: Embedded Finance – Who Will Capture the Value? Risk vs Reward
- Also other drivers for a shift to cloud-native, consumption-based platforms:
- to leverage the elasticity of the cloud to allow banks to meet demand, test new value propositions, and to iterate faster with reduced upfront capital investment;
- to drive faster speed to market for products and partners by leveraging an API-first core;
- to enable better and faster access to data for insights on customers and other analytics
- to improve transaction processing speeds that are required for modern digital commerce use cases in e-commerce, platforms and account to account services.
- We expect additional enhancements that allow banking to be vertically embedded into experiences and processes, many of which are hard to predict. They will likely include ‘mash up’ experiences of banking within non-banking experiences – models to be built upon and improved.
Continue to the full article --> here
KPMG: Top Fintech Trends in H1 2022
- Valuations continuing to adjust as cost of capital increases
- M&A will increase as corporates and PE firms look for bargains
- Interest in cybersecurity automation will keep growing
- B2B solutions will become more attractive to investors
- Fintechs will continue to focus on data-driven solutions
- Crypto and blockchain investments will increasingly focus on infrastructure
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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NCFA Open Banking Future Outlook with Senator Colin Deacon and Mahi Sall
About NCFA Canada | Nov 15, 2022
The National Crowdfunding & Fintech Association of Canada (NCFA), true to its mission of providing education, industry stewardship, networking, growth, and funding opportunities for innovative financial technologies and related sectors, is pleased to launch a brand new thought leadership series on Open Banking led by Berlin-based NCFA ambassador and independent expert in Fintech-Bank Partnerships Mahi Sall.
The series is called ‘Canada’s Open Banking Journey’ and aims to aggregate international and domestic perspectives of Open Banking/Finance expert practitioners from around the globe to advance dialogues, key considerations, and explore potential solutions for the development of a made in Canada open banking regime with the following timeline:
- Sep 2018: Canada’s Open Banking journey officially began when the government established a multi-stakeholder Advisory Committee tasked to conduct a review into the merits of Open Banking
- Apr 2021: Advisory committee publishes final recommendations
- Mar 2022: Government appoints Abraham Tachjian – PwC Canada as Canada’s Open Banking lead responsible for convening industry, government and consumers in designing the foundation of the system of Open Banking for a launch in 2023.
- Oct 2023: Phase 1 implementation expected
Speakers:
Senator Colin Deacon, Senate of Canada
Mahi Sall, NCFA Ambassador, Open Banking
Themes:
0. Introduction
1. Championing Open Banking
2. Current State in Canada
3. Governance
4. Success
5. Implementation Risks
6. Future Outlook *THIS VIDEO*
NCFA Open Finance, Open Banking and Beyond Banking interviews:
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Support NCFA by Following us on Twitter!Follow @NCFACanada |
Canada’s Open Banking Journey: Working Group Meeting Updates
McMillan | Darcy Ammerman, Robbie Grant, Mitch Koczerginski, Pat Forgione, Robert C. Piasentin, Isabelle Guevara | Nov 2, 2022
Four working groups assembled earlier this year have been working to develop common rules, accreditation criteria, and technical standards for Canada’s open banking system.
- Accreditation: criteria should focus on four elements: (1) background information and internal governance, (2) financial capacity, (3) certification, and (4) privacy and security.
- Categories of environmental and social governance (ESG) and anti-money laundering (AML) were considered but no agreement was reached.
- The working group took interest in the potential for a framework with different tiers of accreditation, based on factors such as size or role of the prospective participant. Participants must have the financial capacity to meet their liabilities.
- An adequate insurance policy or comparable financial guarantee would be required in order to obtain accreditation.
- General consensus in favour of Australia’s flexible approach, which evaluates the adequacy of an insurance policy based in part on (i) the nature of the products or services to be offered, (ii) the nature of data to be managed, and (iii) the volume of data to be handled.
See: NCFA Open Banking Governance with Senator Colin Deacon and Mahi Sall
- Liability: This includes establishing (i) the process for consumer complaints, (ii) rules to apportion liability, and (iii) traceability frameworks.
- When a consumer suffers a loss in the course of exercising any function of open banking, the consumer should not be liable for more than a nominal fee of $50, unless it can be proven that the consumer committed gross negligence, gross fault or fraud.
- the data recipient should be required to automatically compensate consumers who suffer financial harm, though a pooled fund between all open banking participants was also considered.
- Interest in creating a standard approach to protecting consumers following a sensitive data breach. Active and ongoing measures such as credit monitoring services, shutting down compromised accounts, changing account numbers, and transparency of root cause investigations.
- Traceability framework to facilitate monitoring and create audit trails for data-in-transit such as user consent, flows of data, and date stamps of each data-sharing request.
- The group agreed upon a decentralized approach (i.e. one without a government data intermediary).
- The group also agreed that all data recipients should have obligations even if they outsource their business operations.
- Privacy: rules for how consumers provide and revoke consent to share their data, and how consumer data can be used pursuant to the consent provided.
- Should align with privacy standards already established for the financial services industry, including federal and provincial privacy laws.
- Agreed that the process for giving or withdrawing consent should be clear, simple and transparent, to promote a positive consumer experience.
- Revocation of consent automatic under certain circumstances, such as when a consumer closes their account, or when the purpose for which the consumer’s data was collected changes.
- Public disclosure of useful information for consumers (e.g., terms and conditions, service agreements, complaint procedures, etc.) and agreed that the principles of the Financial Consumer Protection Framework would serve as a good baseline for these requirements.
See: Canada’s Open Banking Journey: Interview with Abe Karar, Chief Product Officer, Fintech Galaxy
- Security: baseline security requirements for open banking participants, particularly in light of the data security, cyber security and operational risks of open banking.
- After assessing various existing frameworks and certification regimes (including ISO27001 and SOC 2), a majority of the working group agreed that the National Institute of Standards and Technology (“NIST”) framework was the best option.
- Challenges include fact that (a) compliance may be challenging for smaller participants, (b) significant time and resources may be required for implementation, framework modifications, and additional controls, and (c) NIST framework expertise in the market is relatively low.
- After assessing various existing frameworks and certification regimes (including ISO27001 and SOC 2), a majority of the working group agreed that the National Institute of Standards and Technology (“NIST”) framework was the best option.
Continue to the full article --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Support NCFA by Following us on Twitter!Follow @NCFACanada |
