Wych’s Post

UK – Open banking marks major milestone of 10 million users Open Banking Limited (OBL) announced that there are now 10 million consumers and small businesses regularly benefiting from using open banking technology. The milestone comes days after the Government committed to introducing a Smart Data Bill in the King’s Speech, which will unlock the full potential of open banking and expand smart data schemes into other economic sectors. The UK’s open banking ecosystem is already worth more than £4 billion to the UK economy, attracting inward investment and creating almost 5000 skilled digital jobs across the country. „Competition has been a key driver to growth, and we’ve observed that when one company focuses on open banking technology their direct competitors soon follow. We’ve also seen existing providers expand their offer and use of open banking, as well as the launch of creative new propositions.” – OBL said. Marion King, OBL Chair and Trustee: "Consumer empowerment is core to open banking and it’s fantastic to see more and more people and small businesses take advantage of the financial opportunities open banking provides. From access to cost-effective credit, building a regular savings habit or making more informed financial decisions, open banking is delivering the means for millions of people to improve their financial wellbeing, delivering a true public good.” This announcement comes just days after the Government committed to introducing smart data powers through a new Digital Information and Smart Data (DISD) Bill. This essential legislation will build on the important work that open banking has successfully delivered, laying the foundations for future growth of the open banking ecosystem, and which will now propel the UK forward towards an innovative, data-driven economy. "Open banking has shown what a truly smart data economy can achieve. The legislation will unlock the full potential of open banking as we transition from the current competition remedy to a long-term regulatory framework." said Henk Van Hulle, OBL CEO. "It also cements the UK’s role as a standard-setter for open banking across the globe, with many countries adopting a similar approach.” – he added. OBL was only set up in 2016, with the launch of open banking in January 2018.

Despite a surge in popularity around the world, open banking still remains a revolutionary concept in one of the world's largest financial markets: the United States. But, things look set to change. Although the US houses the largest and most influential tech ecosystem in the world, the country has been notoriously lagging when it comes to adoption of new payments and banking technologies, new standards and the latest innovations – such as instant payments. But with the release of the Consumer Financial Protection Bureau's proposed open banking rule in 2023, it appears that all financial institutions will be required to securely share certain data from a consumer’s banking products with third parties at the consumer’s request. The proposed rule covers data associated with checking and savings accounts, prepaid cards, digital wallets and credit cards, and would require that institutions provide a developer interface for third parties. Given this, what might instant open banking payments in the US might look like? Tyler Brown, Senior Research Analyst at CCG Catalyst explains what this could mean for both consumers and merchants, exploring the history of open banking in the US, governance mechanisms and the implications for instant payments in the US market. Get the full story via Flow: https://lnkd.in/d9XsnraG

Building Trust in Open Banking: The Critical Role of Data Privacy and Security Good morning! And welcome to an awesome week!👌 As we conclude our series on the insightful discussions at the #NigeriaFinTechForum, I’d like to turn the spotlight on a topic that cannot be overemphasised—**data privacy and security** in the age of open banking. I will summarise our discussions here and add some of my views as well. Why is this crucial? In an era where collaboration between fintechs and traditional banks is shaping the future of financial services, ensuring robust data security has never been more critical. Since open exchange of data is the the backbone of this new banking systsem, the potential for security breaches is even higher, putting customer data at risk. Recent events have shown us just how real these risks are. For example, earlier this year, one of Nigeria’s leading fintech companies, experienced a major security breach where about ₦11 billion (~$7 million) was transferred unauthorized to multiple accounts across various financial institutions. This incident, along with the more recent news of a ₦40billion fraud in a tier 1 Nigerian bank, underscores the vulnerabilities that even the most prominent fintechs and financial institutions can face. These breaches serve as continuous reminders that as we push for a more open and inclusive financial system, we must double down on security measures to retain clients' trust. Simply put, it is extremely crucial that customers' data are securely protected, to earn customers trust which is essential for the continued growth of open banking. A major consequence of trust would be increasing financial inclusion. And according to the **EFInA Access to Finance (A2F) Survey**, headline financial inclusion had grown to 74% by 2023, signifying that nearly 3 in 5 adult Nigerians were financially included in 2023, compared to about one in three adults who remained excluded in 2020. Formal financial inclusion also improved from 56% in 2020 to 64% in 2023. So, what are our next steps? As we move forward, the fintech industry would need to prioritize, not just innovation but also the implementation of security protocols. We need to begin to view data privacy and security not just as a regulatory checkbox but also as the cornerstone of customer trust and the sustainable growth of open banking. As you watch the reel from the event, consider this: the future of banking isn’t just about competition, it’s about meaningful collaborations. It’s about banks and fintechs coming together to create a financial system that is secure, inclusive, and deeply responsive to the needs of every Nigerian and African, as the case may be. I'd like to hear your thoughts on this too... have you ever experienced a security breach on your accounts? #FinTech #DataSecurity #DataPrivacy #OpenBanking

𝗢𝗽𝗲𝗻 𝗕𝗮𝗻𝗸𝗶𝗻𝗴: 𝗢𝗽𝗽𝗼𝗿𝘁𝘂𝗻𝗶𝘁𝗶𝗲𝘀 𝗮𝗻𝗱 𝗖𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲𝘀 𝗳𝗼𝗿 𝗙𝗶𝗻𝘁𝗲𝗰𝗵 𝗮𝗻𝗱 𝗕𝗮𝗻𝗸 𝗔𝗱𝗼𝗽𝘁𝗶𝗼𝗻 Open Banking empowers consumers to share their financial data with accredited third parties via APIs that meet regulated industry standards. Historically, banks kept customer data within closed systems, and third parties resorted to "screen scraping" to access it. Open Banking, however, enables more efficient and secure data sharing, allowing consumers greater control over their financial data and opening doors for companies to innovate with new products and services. On September 9, 2024 CYBS Consulting was excited to take part in the Open Banking: Opportunities and Challenges for Fintech and Bank Adoption event hosted by NYPAY, in New York City, where we examined the path forward for Open Banking adoption in the U.S. and abroad. 𝗞𝗲𝘆 𝗣𝗼𝗶𝗻𝘁𝘀 • 𝗖𝗼𝗻𝘀𝘂𝗺𝗲𝗿 𝗗𝗮𝘁𝗮 𝗖𝗼𝗻𝘁𝗿𝗼𝗹: Open Banking allows consumers to manage their financial data with accredited third parties. Through APIs, these third parties can securely access data, fostering new opportunities for fintech innovation. • 𝗨.𝗦. 𝗔𝗱𝗼𝗽𝘁𝗶𝗼𝗻 𝗮𝗻𝗱 𝗥𝗲𝗴𝘂𝗹𝗮𝘁𝗼𝗿𝘆 𝗟𝗮𝗻𝗱𝘀𝗰𝗮𝗽𝗲: While many view Open Banking as the future of financial services, the U.S. has lagged in its implementation. In 2018, the Treasury affirmed that consumers own their financial data but opted for a private-sector-led approach to data sharing, without passing binding regulations. • 𝗖𝗙𝗣𝗕'𝘀 𝗦𝗲𝗰𝘁𝗶𝗼𝗻 𝟭𝟬𝟯𝟯: The upcoming CFPB rulemaking under Section 1033 of the Consumer Financial Protection Act is set to transform the U.S. Open Banking landscape. Expected by October 2024, the rule will require banks to share data with consumers or their authorized third parties, without charging fees, and mandate strong privacy, security, and accuracy measures. This marks a significant shift towards a more open financial ecosystem. 𝗖𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲𝘀 & 𝗢𝗽𝗽𝗼𝗿𝘁𝘂𝗻𝗶𝘁𝗶𝗲𝘀: • 𝗥𝗲𝗴𝘂𝗹𝗮𝘁𝗼𝗿𝘆 𝗖𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲: Banks and fintechs must navigate complex regulatory requirements to ensure the privacy, accuracy, and security of shared data. • 𝗜𝗻𝗻𝗼𝘃𝗮𝘁𝗶𝗼𝗻 𝗣𝗼𝘁𝗲𝗻𝘁𝗶𝗮𝗹: Open Banking holds great promise for consumers, enabling more personalized financial services, increased competition, and fostering innovation across fintech and traditional banking sectors. On behalf of @NYPAY, we want to thank everyone who attended our first in-person event in four years. A special thank you to panelists Jane Barratt , Gary Stein, and Cihat Fitzgerald, and moderator Judie Rinearson, for leading such a thought-provoking discussion. And a huge thank you to K&L Gates LLP for providing the venue! We look forward to seeing you at the next NYPAY event. If you’re interested in supporting NYPAY, let us know! Thomas Layman and Alfredo Sarria, NYPAY Events Committee Chairs #OpenBanking #Fintech #DataSharing #CFPB #API #ConsumerData #NYPAY

Great insights from the NYPAY event on the future of Open Banking! Exciting to see how new regulations like the CFPB's upcoming rule will shape the landscape, empowering consumers and driving innovation in the fintech space. Thanks to all the panelists and attendees for an engaging discussion! #OpenBanking #Fintech #CFPB #DataSharing #FinancialInnovation #CYBSConsulting

The Next Step For Fintechs Digital financial services (DFS) have gained momentum in Pakistan since the Covid pandemic. Mobile app and internet banking have grown phenomenally, and branchless banking accounts have surged to 103.1 million. The State Bank (SBP) has launched Pakistan’s first fully interoperable instant payment gateway — RAAST — and recently introduced a merchant payment module. Thus, the country’s digital financial services ecosystem is ready for yet another major disruption: open banking solutions. Open banking is the practice of consumer-initiated, secured and explicitly approved data sharing among financial institutions, investment companies, and third-party financial service providers (which are typically fintechs) to access their customers’ financial information through secure application programming interfaces (APIs). In simpler terms, it enables the sharing of financial data, with the account holder’s consent, between different financial service providers. Open banking enables the sharing of data between different financial service providers with the account holder’s consent In an open banking ecosystem, third-party providers (TPPs) facilitate and add value to the interactions between financial institutions and users by providing a suite of innovative and tailored services that can be grouped into two core categories: providing users with account information and initiating payments on behalf of the users. The BenchMatrix Deputy Group CEO, Nabeel Qadeer, believes that open banking is becoming a major source of innovation and has the potential to reshape the competitive landscape and consumer experience of the banking industry. The basic premise behind open banking is to enable the users of financial services to access, manage, and leverage their financial data through open banking-enabled applications in order to take advantage of better products, price offerings and services. Therefore, open banking fundamentally rebalances the power between financial institutions and users of financial services while making the experience of transacting money digitally more convenient and intuitive. It establishes an interconnected market where diverse stakeholders collaborate, placing users at the forefront of this transformation. At an ecosystem level, open banking not only creates opportunities for consumers and digital businesses but also disrupts the conventional banking regime. On the consumer side, open banking enables consumers to manage and track their financial data and empowers them to access a wide range of financial tools and non-financial digital consumer services. Consumers can access a wider range of financial tools and non-financial digital consumer services through open banking For businesses, open banking-enabled applications can offer a comprehensive set of financial management services while also making business-related data accessible to financial institutions. #Fintechs #OPenBanking #Apis #Tech #Innovations #Mindset

M-Pesa, a mobile money service launched in 2007 by Safaricom, Kenya's largest mobile network operator, has since become a revolutionary example of financial inclusion and mobile banking in emerging markets. This case study will delve into why M-Pesa was successful, analyze its challenges to provide a few interesting insights. M-Pesa allows users to deposit, withdraw, transfer money, and pay for goods and services easily with a mobile device. "M" stands for mobile, and "Pesa" is Swahili for money. The service was designed to target the unbanked population, providing them access to financial services through the ubiquitous tool in their pockets—the mobile phone. Challenges and Near Failures: 1. System Overload: Early on, M-Pesa faced technical challenges that threatened system reliability and user trust. The platform initially was not built to handle the massive volume of transactions it attracted, leading to system downtimes. 2. Fraud Concerns: As the service grew, so did the incidents of fraud. Scams involving fake transactions or deceptive agents posed significant risks, potentially undermining user confidence in the system. 3. Regulatory Challenges: As M-Pesa’s influence grew, it caught more regulatory scrutiny. Balancing innovation with financial security became a tightrope, particularly concerning data privacy and transaction security. 4. International Expansion Difficulties: M-Pesa's attempts at replicating its success in other countries like South Africa and India faced challenges due to different regulatory environments, banking structures, and consumer behaviors. Key to Success: 1. Deep Market Penetration: At its launch, Safaricom already had a vast customer base with high brand loyalty. M-Pesa leveraged this by integrating the service into the existing network, ensuring widespread uptake due to the already familiar brand. 2. Simplicity and Accessibility: M-Pesa’s interface was user-friendly; transactions could be completed with simple SMS technology, which was critical in regions with low smartphone penetration. The service required no internet connection, making it accessible to users with basic mobile phones. 3. Strong Agent Network: The rollout included the creation of a dense network of M-Pesa agents where users could deposit and withdraw cash. This network became a critical component in rural and underserved urban areas, effectively solving the last-mile problem in banking. 4. Regulatory Environment: Initially, Kenyan regulators adopted a “test and learn” approach which allowed M-Pesa to grow without immediate stringent regulations. This flexible regulatory framework was crucial for its early and rapid growth. M-Pesa exemplifies how innovative solutions, when aligned with user needs and supported by a favorable regulatory environment, can lead to transformative change. 🌍💼 #FintechSuccess #FinancialInclusion #MpesaRevolution #AfricanInnovation 📈📲

We aim to emulate the transformative impact of M-Pesa in the fintech ecosystem. M-Pesa's success story is largely attributable to its ability to fill a significant market gap in financial services, leveraging mobile technology accessible to the masses. This has led to improved financial inclusion. M-PESA Africa has contributed to poverty reduction, economic empowerment, and the creation of entrepreneurship opportunities across Kenya. Moreover, M-Pesa isn't just about individual empowerment; it's about driving economic transformation. By facilitating efficient and low-cost transactions, especially in remote areas where traditional banking services are scarce, M-Pesa has fueled productivity and growth for businesses of all sizes. From small-scale traders to farmers and entrepreneurs, the ability to transact easily and securely has unlocked new possibilities.

Open banking continues to revolutionise the financial landscape by offering consumers more control, transparency, and personalisation in managing their finances. A key aspect of open banking is the ability to streamline payments and financial management. Customers can link multiple bank accounts through a single platform, making it easier to access and control their finances. For instance, open banking allows customers to view all their accounts, make payments, & manage budgets from one app, offering seamless convenience and reducing the need for multiple banking apps. Examples of open banking in action include payment initiation services like those offered by fintechs such as Plaid and Tink. These services enable consumers to make direct payments from their bank accounts without relying on card networks or traditional payment methods. This level of integration not only simplifies the user experience but also reduces transaction fees. Moreover, open banking fosters financial inclusion by enabling new entrants, particularly fintechs, to provide personalised financial services that cater to underserved populations. These services can include tailored loans, credit products, and financial planning tools based on a user’s financial behaviour, which is made accessible through data sharing. The rise of open banking is expected to accelerate significantly. According to Allied Market Research, the global open banking market is projected to grow from $15.13 billion in 2021 to $111.29 billion by 2031, reflecting a compound annual growth rate (CAGR) of 22.3%. Juniper Research also estimates that $116 billion in payments will be processed via open banking by 2026. The growth is fueled by increasing consumer demand for personalised services and the need for better financial management solutions. However, with the growing adoption of open banking, there are legal and regulatory considerations. In the book 𝐅𝐢𝐧𝐭𝐞𝐜𝐡 𝐋𝐚𝐰 𝐚𝐧𝐝 𝐏𝐫𝐚𝐜𝐭𝐢𝐜𝐞 𝐢𝐧 𝐍𝐢𝐠𝐞𝐫𝐢𝐚, we discuss the key legal aspects fintechs must address, including: 𝐃𝐚𝐭𝐚 𝐏𝐫𝐨𝐭𝐞𝐜𝐭𝐢𝐨𝐧 𝐚𝐧𝐝 𝐏𝐫𝐢𝐯𝐚𝐜𝐲: Open banking involves the sharing of sensitive financial information, making compliance with data protection laws critical. 𝐂𝐲𝐛𝐞𝐫𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐲: With more data shared across platforms, safeguarding against cyber threats becomes paramount. 𝐑𝐞𝐠𝐮𝐥𝐚𝐭𝐨𝐫𝐲 𝐂𝐨𝐦𝐩𝐥𝐢𝐚𝐧𝐜𝐞: Open banking frameworks require financial institutions to comply with strict regulatory standards. 𝐂𝐨𝐧𝐬𝐮𝐦𝐞𝐫 𝐏𝐫𝐨𝐭𝐞𝐜𝐭𝐢𝐨𝐧: Ensuring that consumers understand the risks and benefits of open banking services is vital for protecting their rights. As open banking continues to reshape the financial ecosystem, stakeholders must navigate these regulatory landscapes to unlock the full potential of this transformative technology. You can get your copy of the book from Barnes & Noble, Amazon, Google Books and Legal Naija. #fintech #openbanking #investments

It's encouraging to see Consumer Protection being prioritized from the outset of this new system. By integrating these principles early on, we can avoid repeating past mistakes and ensure a more beneficial outcome for all stakeholders.