Category Archives: Fintech AI/ML, Data-driven

FFCON20 Week 6 Wrap-Up: Currency Wars, Digital Assets, & The Rise of DeFi

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NCFA Canada | Samuel He | August 2, 2020

Decentralized finance - FFCON20 Week 6 Wrap-Up: Currency Wars, Digital Assets, & The Rise of DeFi

Overview

The modern advancements in technology have led to new innovative methods in the banking and payment sectors. This has led to traditional methods being enhanced through digital assets. This session features panels discussing the futures of CBDCs and digital assets, the anatomy of digital securities, and the rising field of decentralized finance and its impact on the banking and payment sector.

Fireside Keynote: Enhancing Traditional Banking and Payments Through Digital Assets (info | video)

The session began with a fireside keynote with Tom Pageler and Lisa Hook on the topic of digital assets and how it has enhanced traditional banking and payments. Tom notes the current success of digital assets with innovative products such as AliPay in the currency market. Tom has a very positive view of the role of digital assets in that it’s allowed new enhanced infrastructure as well as transparency. With more and more industries going digital, he believes that if done properly, enhancing current methods with digital assets can lead to higher profit margins and efficiency. Notably, the public ledger with the digital platform would allow smoother transactions across jurisdictions. While Tom believes that the transition has been going extremely well with governments starting to show support, he also mentions potential risks as well. These can involve fraud related to tracking IDs and IP addresses that need to be taken in consideration.

Panel: The Future of CBDCs, Digital Assets and Trading (info | video)

This panel featured talks about the future of central bank digital currency (CBDC), its biggest advantages, and perspectives on how its adoption will play out. One of the biggest advantages that digital currency offers is its speed and efficiency, particularly between parties internationally. Currently, there frequently exists friction across countries, making transactions both timely and costly. The panel also believes the adoption of digital currency will be a good transition away from cash, which has many inefficiencies such as susceptibility to forgery and criminal activity. The panelists also noted that the transition must be gradual as not everyone is on the internet and simply getting rid of cash as a means of transaction will exclude a lot of people.

Austin Hubbell: “One of the biggest risks of CBDCs is technology risk”

 

TEDx: The Road to Crypto Approval & What It Means for Fintechs (info | video)

In this session, Blair Wiley shares his experience with getting his business WealthSimple to receive regulatory approval from every securities regulator to offer a crypto trading platform in Canada. He describes the journey to regulatory crypto approval and offers lessons he has learned along the way. Blair has strong belief that cryptocurrency is the future in financial services, but with various fraud cases involving digital assets in Canada, they don’t have the best reputation with regulators. However, Blair believes that it is important to look at things from the perspective of the regulators and understand that regulations want to ensure compliance and offer protection for consumers. The lesson he offers is to go for natural extension to current regulations and stick to their core tenets. Blair also recommends going to regulators with a fully built product rather than just an idea or concept as it gives the impression of better preparation done in the eyes of the regulators.

Blair Wiley: "speak the language of the regulators"

Panel: The Rise of Decentralized Finance (info | video)

The next panel discusses the concept of decentralized finance – frequently referenced as DeFi – and its significance. DeFi is defined as the ability to create financial services with blockchain technology. This would allow anyone to create applications that enable financial activity to take place without the involvement of a centralized institution. The panelists believe that some factors that contribute to the rise in DeFi is gamification and efficiency. With cryptocurrency, users can now earn interest, and the lending and borrowing infrastructure is also growing. The panelists believe that the future of DeFi will see more things scalable like sports betting as well as moving outside of trading digital assets. Their prediction that 80% of finances will be run on blockchain technology in next 5 years.

Workshop: Anatomy of Digital Securities by Exponential (info | video)

Digital securities JW Exponential - FFCON20 Week 6 Wrap-Up: Currency Wars, Digital Assets, & The Rise of DeFi

The final presentation was a workshop presented by James Wallace about the anatomy of digital assets and securities. James believes that digital securities help build a more efficient global economy and trading system. Some of the benefits that he emphasized are less barriers to entry, more accessibility, less friction across borders, and less compliance and regulations. Also mentioned was its security – There is very low risk with storage and ownership is recorded and verified on immutable ledger. James also showed many charts, one illustrating the substantial costs savings and value creation of digital assets. Digitizing will remove significant costs as well as generate new growing liquidity that should drive the asset value higher.

 

Conclusion

The future of banking and payments has a bright future with new innovations with digital assets. Digital transactions have benefits of greater efficiency, speed, and accessibility to a wider range of the population. Government support for digital assets helps tackle precautions that need to be taken to avoid fraud and other risks associated with digital transactions. With majority of finances likely to be run on digital assets, it is time to embrace these new innovative methods.

 

Continue to watch the FFCON20 Session Recordings --> here

 


NCFA Jan 2018 resize - FFCON20 Week 6 Wrap-Up: Currency Wars, Digital Assets, & The Rise of DeFi 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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Amex Acquires SoftBank-backed Kabbage After Tough 2020 for the SMB Lender

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Techcrunch | Ingrid Lunden | Aug 17, 2020

Kabbage and American express - Amex Acquires SoftBank-backed Kabbage After Tough 2020 for the SMB LenderSmall and medium businesses have been some of the hardest hit in the coronavirus pandemic, and in many cases that has had a knock-on effect on the companies that provide services to them. Now, a startup that built a whole business around loaning money to SMBs has been acquired by a giant in the world of credit as the fintech industry begins to size up what the “new normal” will look like when it comes to doing business with smaller businesses.

Kabbage, which had built a platform that uses machine learning algorithms to assess and loan out money to small business owners, is getting gobbled up by American Express, the two companies announced today. Amex says it has “millions” of small business customers and the addition of Kabbage’s loan and other financial services tools signifies that it plans to double down on that sector with a much wider range of offerings.

See:  Dealing with a crisis: FinTech versus Bank

The financial terms of the deal are not being disclosed, but reports earlier this month put the value of the acquisition at up to $850 million. For some context, Kabbage had raised nearly $990 billion in debt and equity (and at least $3.5 billion in securitizations), and was valued at over $1.2 billion in its last equity round of $250 million, in 2017, led by SoftBank.

The acquisition comes at a tricky time not just for SMBs but also the fintech companies that serve them, and specifically for Kabbage itself, with all of them weathering the storms of COVID-19.

Amex’s acquisition, tellingly, will include employees, technology and financial data, but “Kabbage’s pre-existing loan portfolio is not included in the purchase agreement,” Amex noted in its press release.

As for what happens with that loan portfolio, a spokesperson for Kabbage said there will be a separate entity that manages and services these loans at the time of close.

We don’t have a total amount of value for that loan book, but a spokesperson confirmed it includes not just loans that Kabbage had issued in its previous years of operation, but also loans made to SMBs in the U.S. under the Paycheck Protection Program. As of last week the latter totaled $7 billion across nearly 300,000 loans; and in 2019 Kabbage told TechCrunch it was on pace to loan out between $2.5 billion and $3 billion, so the pre-existing loan portfolio is not insignificant, and in current economic times, possibly one that comes with a lot of risk.

The news caps off an interesting run in the world of fintech that has seen Kabbage hit some significant ups and downs. The company attracted the attention of SoftBank and many other investors (and customers) on the back of a fast-growing business based around the idea of using artificial intelligence to speed up the process of small businesses applying for and subsequently getting loans.

See:  Advisory experts back P2P lending sector to become mainstream investment class

Disrupting traditional banks and their slow and often frustrating approach to evaluating loan applications, Kabbage taps a wide variety of sources, from traditional accounting statements through to social media signals, into its proprietary machine learning algorithms, in order to determine eligibility for issuing loans, and the terms under which a business would pay it back. It was successful enough that Kabbage was also offering its product as a white-label service to other loan providers (including the banks it was disrupting).

“For several years, American Express has been expanding beyond our industry-leading commercial card products to offer our business customers a growing set of payment and working capital solutions,” said Anna Marrs, president of Global Commercial Services at American Express, in a statement.

“This acquisition accelerates our plans to offer U.S. small businesses an easy and efficient way to manage their payments and cash flow digitally in one place, which is more critical than ever in today’s environment. By bringing together Kabbage’s innovative technology and talented team with our broad distribution capabilities and over 60 years of experience backing small businesses, we can better help our customers successfully emerge from this challenging period and beyond.”

Continue to the full article --> here

 


NCFA Jan 2018 resize - Amex Acquires SoftBank-backed Kabbage After Tough 2020 for the SMB Lender 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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Global Survey on Impact of Covid-19 and Recession Risk: Fintech and Financial Institutions

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Norton Rose Fulbright | July 2020

Norton Rose Fulbright Fintech and institutions covid lockdown recession Survey - Global Survey on Impact of Covid-19 and Recession Risk:  Fintech and Financial Institutions

Financial institutions, including banks, asset/fund managers and insurers, as well as established FinTech businesses and start-ups, have been presented with major disruptive events with the advent of COVID-19 and national lockdowns, and with the impending risk of global or regional recessions.

How are financial institutions and FinTechs responding to such challenges? What role might new business models, strategic collaborations, investment and M&A, outsourcing, regulatory considerations, and the risk of litigation play in addressing such challenges?

See:  Fintech Reports and Research

 

To find out, in May and June we undertook a survey of a range of banks, asset/fund managers, insurers, established FinTech businesses, FinTech start-ups and venture capital and consulting firms across the globe.

We invite you to read the findings of the survey which cover the following subject areas:

  • FinTech as a strategic priority
  • New FinTech use cases
  • FinTech strategic collaborations
  • FinTech investment and M&A
  • Outsourcing and FinTech
  • Regulatory impact in relation to FinTech initiatives
  • FinTech areas of potential dispute

Download the 23page PDF Report --> Now

 


NCFA Jan 2018 resize - Global Survey on Impact of Covid-19 and Recession Risk:  Fintech and Financial Institutions 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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CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS!



FFCON20 Pitching and Demo Winners - Global Survey on Impact of Covid-19 and Recession Risk:  Fintech and Financial Institutions



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FFCON20 Draft Shortlist ENGAIZ: Building relationships through AI based risk mitigation

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NCFA | Samuel He | July 22, 2020

FFCON20 Fintech Draft Engaiz - FFCON20 Draft Shortlist ENGAIZ: Building relationships through AI based risk mitigation

Technology innovation and competition has led to increased dependence on third-party providers for essential services.

The result has been an increase in security risks, data privacy, business resiliency, and reputation. These risks cost organizations millions of dollars every year. And the problem is made worse by trying to manage these risks with disintegrated risk management processes and manual governance.

Founded by Jai Chinnakonda, ENGAIZ is an automated AI-driven platform aimed at tackling these problems.

ENGAIZ’s mission is two-fold. One goal is to help enterprise customers effectively engage and govern third-party vendors. This strengthens relationships, mitigates risks, controls cost, driving performance and innovation.

The second is geared towards helping third-party vendors move from being a mere vendor to a trusted partner. It is a win-win scenario.

ENGAIZ uses machine learning and analytics to provide Integrated Governance and Continuous Risk Monitoring. Their services center on Strategic Vendor Engagement and Strategic Customer Engagement.

Strategic Vendor Engagement provides several benefits to organizations. The platform allows for the ability to schedule, track monthly, quarterly and annual business review meetings with their vendor partners. It also emphasizes a move from a focus on ‘Cost Savings’ to ‘Risk Sharing’ partnerships that fosters a culture of Innovation.

Strategic Customer Engagement provides ample benefits to third party providers. The centralized document repository increases efficiency by allowing the ability to manage and track customer-related documents all in one place. The platform also ensures that providers are compliant with tough regulatory requirements.

Now, if you want to know more about ENGAIZ, see them at FFCON20 RISE Fintech Draft. 

If you like what you see, toss them some stars and give them your votes.

View Engaiz Profile and Vote --> here

Check out other shortlisted Draft Companies --> here

 


NCFA Jan 2018 resize - FFCON20 Draft Shortlist ENGAIZ: Building relationships through AI based risk mitigation 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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FFCON20 Pitching and Demo Winners - FFCON20 Draft Shortlist ENGAIZ: Building relationships through AI based risk mitigation



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Open Banking – North American Style

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Fintech Talents | Lisa Moyle  | Jul 14, 2020

open banking north america style - Open Banking – North American StyleOpen Banking is taking shape in different ways across North America. From driving the development of new providers to enabling existing institutions to keep pace with a fast changing industry, the impact on financial services is significant. As the current crisis demonstrates, the swift change in the economic outlook and the situation of consumers and business alike, not to mention a rapid move to digital channels, the ability to understand, pivot and serve customers is so crucial and can be supported by open access to vital market data.

Open Banking is coming to North America but is taking shape in different ways across the continent. From driving the development of new providers to enabling existing institutions to keep pace with a changing industry, the impact on financial services will continue to grow in significance. That impact and the innovations that open banking initiatives support and catalyse, no doubt, will vary depending on the structure and regulatory framework of the financial services sector and the needs of economies/communities. It both opens the gateway to opportunity and flags challenges and jobs to be done.

See:  Digital IDs Help Open Banking Reach Its Fullest Potential

Open Banking in the US differs greatly, for example, from the European approach which was propelled by technology trends and solidified through regulatory initiatives (PSD2, The Open Banking rules in the UK). There is no single regulatory framework in the US compelling existing institutions to share data through an open API standard and no broad-based accompanying rules protecting consumer data or mandating security standards. According to a 2018 report by the US Treasury, although there is a will to avoid fragmentation and remove regulatory/legal uncertainty, a mandated and coordinated approach is not supported or deemed feasible.

As the report notes, “There are significant differences between the United States and the United Kingdom with respect to the size, nature, and diversity of the financial services sector and regulatory mandates. Given those differences, an equivalent Open Banking regime for the U.S. market is not readily applicable.”

While open finance in North America will not look like it does in the UK or Australia, the need for it here is not unique,” said Steve Boms, executive director of FDATA North America. “And with millions of families and small businesses struggling to keep afloat, there is no time to waste. Consumers will have improved access to capital, financial tools, and sound retirement options once they gain full control of their own data. North American economies simply will not be able to build back until open finance is a reality.”

See:  3 examples of what open finance can do right now

Open banking is coming to America but it will be driven by the private sector and State and Federal regulators will get involved as required rather than being in the driving seat. That may well be the American-way but market forces will continue to drive the adoption of Open Banking.

The Financial Data Exchange (FDX) is a prime example of how the financial industry has come together rapidly around a common, interoperable and royalty-free API standard to make the open finance concept a reality regardless what type of regulatory framework may be in place,” said Don Cardinal, Managing Director of the Financial Data Exchange.

“FDX is a big tent with financial institutions, consumer groups, fintechs, financial data aggregators, payment networks, financial industry groups and other permissioned stakeholders of all sizes at the table and working to ensure that consumers have secure and reliable access to their own data,” added Cardinal.

New entrants will seek access to key troves of consumer data held by banks and other financial institutions and those very same institutions will need to keep pace with the rapidly evolving technological landscape and equally fast changing customer expectations and needs.

According to Alex Yang, Director, CashPro API and Global Open Banking Strategy Bank of America Merrill Lynch, “Absent the ‘letter’ of open banking, organizations like Afinis, SWIFT, and FDX have stepped in to help lead conversations on behalf of the North American corporations who seek access to commercial or retail data and services in the ‘spirit’ of collaboration and innovation. It is this spirit that will help improve the financial lives of businesses and consumers alike.”

See: 

Looking North and South from the large US market. Canada and Mexico are also seeking to create more competitive, responsive and inclusive financial services sectors through exploring/supporting government-led initiatives. The Department of Finance Canada established an Advisory Committee in 2018 and published an initial consultation into whether a UK Style approach should be adopted.

Further plans have been delayed due to the Covid-19 pandemic and progress has been stalled. Whilst the lack of a mandated open API may not block innovation, it may well make a concentrated banking sector slower to move and create barriers to faster innovation.

The current crisis is illustrative as the swift change in economic outlook and the situation of consumers and business alike, not to mention a rapid move to digital channels, further highlights the extent to which the ability to understand, pivot and serve customers is so crucial and can be supported by open access to vital market data.

Continue to the full article --> here

 


NCFA Jan 2018 resize - Open Banking – North American Style 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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3 examples of what open finance can do right now

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Yapily | Joe Terry | Jun 19, 2020

Open Finance image - 3 examples of what open finance can do right nowThe average Briton's relationship with their bank lasts longer than their marriage - and this inertia can be costly. Banks have always been the one-stop shops for all things finance, but thanks to open finance that has changed.

Digital offerings in the financial services sector have changed the way we expect to interact with our banks and manage our finances. Gone are the days where switching is difficult, opening a new account takes weeks or applying for a loan means printing out bank statements.

Open finance is enabling a new wave of innovative financial services. The access to data made available by open banking connections is more versatile than originally imagined. The majority of sectors can now benefit from access to the API links created during the open banking era, meaning that customers can easily share their financial data. From mortgages and pensions to payment solutions, open finance encapsulates the idea of accessibility and removes barriers for banks, firms and consumers to interact more efficiently.

See:  Open banking in Canada - Interview with Senator Deacon at FFCON20

How could open finance change the credit process?

Businesses could benefit from a new, more accessible way of accessing credit. Using open finance could increase efficiency as opposed to the traditional methods used when assessing a businesses loan or credit application. Choosing to use this option means businesses could share their financial data instantly, meaning the lender could:

  • Carry out faster eligibility checks.
  • Assess affordability and credit worthiness instantly.
  • Gain immediate access to historical transaction data.

Businesses would in turn benefit from access to faster funds without laborious checks and waiting times. Open finance would transform credit assessments and could be automated, ensuring less human error, ultimately improving overall lending efficiency.

Open finance can solve the inefficiencies in money management.

How many finance apps do you have on your phone?

The odds are, if you have a credit card, more than one bank or accounting software on your phone, then you have a few different apps. Usually, all of the platforms or apps have different login details (you’re lucky if you only ever use face ID). It can be a nightmare, checking balances, transferring funds and managing accounts.

Open banking provides a secure and scalable method, whereby innovative firms can create money management apps that could collate all of your data in one place. Given the consumers consent, financial data from different accounts and financial institutions can be pulled together and be managed within one platform or app.

See:  UK: Open Finance: The FCA Consults On How To Transform The Financial Services Market

Open finance enables the automation of financial management. Innovative firms could create platforms to enable applications to make financial decisions based on consumer information and preferences. A great example of this is moving money to the best interest rate available, maximising the return on savings and the opposite for debt, where moving debt to the lowest interest rate for overdrafts and credit cards could be automated.

Do you check and compare prices for utilities or insurance online?

Today's online comparison sites play a big role in what financial product customers end up purchasing. The quotes are usually generated by the user going through roughly 4 or 5 pages, typing in the relevant information to that product. Customers are then presented with many different quotes or estimates based on the information they have typed in.

Of course, typing in this information presents various challenges. Fraudulent entries being the most frequent. This may be in an attempt to reduce the cost of the product or service or it could be due to human error. However, comparison sites, pension providers, utility companies, insurers and more can utilise open banking data to see the real financial picture, automatically increasing effectiveness and reducing risk. The data made available through open banking could help simplify the process for firms and consumers.

Continue to the full article --> here

 


NCFA Jan 2018 resize - 3 examples of what open finance can do right now 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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Digital IDs Help Open Banking Reach Its Fullest Potential

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PYMTS | July 10, 2020

Open bankingdigital ID aids access - Digital IDs Help Open Banking Reach Its Fullest Potential comes in several flavors, yet its rise requires robust Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures, Zac Cohen, chief operating officer at identity verification firm Trulioo told Karen Webster in a recent interview.

As financial institutions (FIs) work with FinTechs, they need to know that these tech-nimble startups are not only enabling access to customers’ account data but also in a manner that embraces KYC and AML. The end goal: to speed innovation toward new products and services while keeping fraudsters out.

Regulation Vs. Market Forces

The need for both innovation and security comes at a time when open banking is gaining a foothold in the United States due in part to the pandemic. It’s also growing across the pond in the European Union, albeit with some important distinctions.

“In recent years, we’ve seen the heavily regulated version of open banking in the E.U.,” Cohen said. “It’s been a coordinated effort — regulatory-driven, highly standardized and thrust upon the banking community. In the U.S., it’s been an organic-but-inevitable exercise, driven primarily by innovation and consumer demand.”

That’s due in part to the fact that America has a more fragmented banking and regulatory landscape, he said. But despite the differences, Cohen said he believes open banking is here to stay in the U.S.

Just consider all the recent acquisitions from major payments players. For instance, Mastercard last month bought Finicity, while Visa earlier this year acquired Plaid. Through those acquisitions, the networks have shown their interest in serving as intermediaries between banks, their customers and FinTechs that want access to important account-related data.

See:  Refusal to embrace open banking puts Canada behind yet another curve

After all, the financial services ecosystem is striving to give consumers access to their financial records and leverage tech-driven innovations to improve their lives.

Cohen said that if banks don’t jump on board with those goals, they risk losing significant numbers of customers. Consumers want to share and access data to make such things as applying for a mortgage or tracking spending across various accounts easier.

Protecting Consumer Data

But with an ever-greater exchange of data must come an increased FI focus on data privacy, data ownership and how information gets used, he said. At a high-level view, banks must have robust ID verification procedures in place, making sure that the right people are showing up at the right time to do the right thing.

Webster noted that KYC and AML procedures aren’t governed by global standards. However, Cohen said that in the U.S., various forms of privacy legislation have been making headway. For instance, he pointed to statewide initiatives in California and Illinois that have focused on biometrics.

“It’s a good move for organizations that are involved in open banking and driving that innovation to have similar high privacy standards in that regard,” said Cohen.

Checks And Balances

He recommended that organizations have checks and balances to make sure consumers are protected and data is secured via coordinated efforts between banks and FinTechs.

Along those lines, financial services players — banks and FinTechs among them — are entering into data exchange agreements that operationalize tenets around what can be done with data, what information is needed and how long it can be stored.

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“You’re confirming pieces of information on demand, but you’re not maintaining an open channel, nor are you retaining information nor sharing it or using it for any other purpose other than strictly what has been stated,” he said.

Generally speaking, firms shouldn’t retain data in searchable format, but should keep it in anonymized formats and quickly expunge it, Cohen said.

“When you feed that information back or you provide that connectivity and access, there’s no reason to retain it,” he said. “As long as you’re following strong data retention principles and as long as you’re securing those networks and channels, that’s the basic foundation that you want when operationalizing open banking.”

The Pandemic Is Speeding Innovation Up

Dialogue and close coordination between financial services players have spurred the equivalent of three years of innovation during the pandemic’s past three months, Cohen said.

“There’s been a huge amount of volume and demand for these types of digital journeys, as opposed to being able to walk into a branch and do things in person,” he said.

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