Open Finance Report 2023: our 5 key takeaways
The Paypers, one of the leading Fintech newspapers in Europe, just released the 7th edition of the Open Finance Report, entitled ‘The Open Revolution: From Open Banking to Open Finance. The Road to Open Data Continues.’
While Open Banking has revolutionized financial management and accessibility, Open Finance extends this transformation across multiple financial domains. As Vlad Macovei (Senior Editor, The Paypers) underlines, ‘Open Finance is not merely a conclusion but a progressive step toward leveraging consumer data for transformative solutions that transcend industries.’ The report envisions a future where Open Finance transcends industries, emphasizing the need for a holistic understanding and collaboration to unleash its full potential. It advocates for leveraging consumer data to innovate, charts the trajectory toward Open Data, and encourages active industry participation for a transformative future in Open Finance and Open Data.
#1 Evaluating Pan-European Payment Schemes for an Open Finance Future
In the quest for an integrated European payments market, Tino Meissner from Deutsche Bank evaluates the opportunities and hurdles surrounding various pan-European payment schemes. These initiatives, including the European Payments Initiative (EPI), SEPA Payment Account Access (SPAA), and SEPA Request-to-Pay (SRTP), are poised to catalyze the evolution towards an Open Finance landscape in Europe.
The European Payments Initiative (EPI) stands as a frontrunner, aiming to replace fragmented payment solutions with a unified digital wallet, wero, in countries like Belgium, Germany, France, and The Netherlands. Concurrently, the SEPA Payment Account Access (SPAA) and SEPA Request-to-Pay (SRTP) schemes are making strides towards fostering Open Finance, offering flexibility and information sharing while refining functionalities.
However, the proliferation of multiple schemes introduces complexities and decisions for market participants, slowing individual scheme adoption. Addressing these challenges necessitates banks to craft solutions that cater to multiple schemes, providing value-added features for specific use cases such as e-invoicing.
Drawing from Deutsche Bank’s experience, Tino Meissner underscores the need for a user-centric approach, simplifying integration for merchants and ensuring broad payment method coverage while transitioning to new methods. Additionally, embracing Open Banking-based Request to Pay is vital for comprehensive reach across local and European payment schemes.
#2 Unlocking Open Finance: A Comprehensive Approach to Assessing Maturity
Open Finance burgeons with financial institutions expanding APIs and developer portals, offering access to products, services, and customer data. INNOPAY pioneers a seven-dimensional model, vital in gauging Open Finance maturity. This assessment paves the way for seizing business opportunities, boosting revenue streams, and complying with future obligations.
Initially focusing on Open Banking compliance, leading financial institutions gradually evolved toward Open Finance, amplifying API offerings. This trend intensifies, especially with the proposed Financial Data Access (FiDA) framework by the European Commission.
Beyond APIs and developer experience, INNOPAY’s model assesses seven key dimensions. From vision & strategy to API insights, each dimension crucially shapes an institution’s readiness to leverage Open Finance potential.
Covering strategic vision, organizational governance, API technology, lifecycle management, API design, developer experience, and insights, this model guides institutions in unlocking new avenues, bolstering revenue, and aligning with compliance requirements in the Open Finance landscape.
#3 UK Fintech Landscape: Pioneering Open Finance Evolution
Dive into the UK’s Open Banking and Open Finance success stories, shaped by trailblazing initiatives and impactful transitions. Amit Mallick, Accenture’s Global Open Finance Lead, emphasizes the collaborative essence driving Open Finance initiatives, stating, “in Open Finance, collaboration is key for both traditional and new players to seize fresh opportunities.”
Key highlights include the OBIE (Open Banking Implementation Entity)’s pivotal role since 2016 and disruptive innovations like Yolt by ING Bank. Amit Mallick’s insights underscore the significance of collaboration and transformational investments. Accenture’s research showcases a 75% focus on embedded payments solutions and a drive toward industry-specific Open Banking offerings, setting the stage for the future.
Explore promising Open Finance use cases, from Confirmation of Payee to Corporate and Treasury APIs, all shaping the financial landscape. The evolving question remains: Will traditional players or newer entities like fintechs and big tech dominate?
Amidst this transformation, security and privacy remain paramount. Amit Mallick advocates, “maintaining high levels of data security is critical for driving trust and adoption.” Robust frameworks and modern consent management are key elements in ensuring secure Open Finance journeys.
#4 The Evolution from Open Banking to Open Everything: A Global Perspective
Vlad Macovei explores the transformative journey from PSD2’s emergence to the expansive scope of Open Finance, pushing beyond traditional banking services. “As Europe stands in front of new regulations that aim to introduce Open Finance to European consumers, the new financial services paradigm will extend beyond traditional banking services.” Through Open Finance, data sharing broadens to investments, insurance, and beyond, encouraging innovation and collaboration. “Open Data’s core objective is fostering transparency, collaboration, and innovation through the unrestricted availability of diverse datasets to the public.”
This shift towards ‘Open Everything’ is not limited to Europe. “Countries like Australia and Brazil showcase unique paths.” Australia’s Consumer Data Right legislation expands to Open Energy and Open Insurance, while Brazil’s phased Open Finance launch reports rapid expansion. Vlad Macovei highlights the trajectory towards an era embracing openness, transparency, and collaboration across industries, marking a significant paradigm shift.
#5 Start investigating Open Finance RIGHT NOW – Anne-Sophie Morvan’s Guide of Do’s and Don’ts
Anne-Sophie Morvan delves into the significant shift towards Open Finance, marked by the introduction of the Financial Data Access framework. FiDA stands as a defining moment, revolutionizing the financial sector by enabling continuous, real-time sharing of customer data among stakeholders. This evolution, while transformative, requires comprehensive strategic, technological, and operational changes in affected companies.
DO’S:
- Understanding your role in the Open Finance ecosystem and defining the implications and use cases for your organization and customers.
- Active participation in discussions defining financial data-sharing schemes.
- Developing a compensation strategy aligned with data-sharing schemes.
- Prioritizing customer-centric approaches by utilizing Permission Dashboards for real-time consent management.
- Engaging with expert companies to leverage their expertise in connectivity and compliance.
DON’TS:
- Neglecting to strategize and act promptly, as the landscape evolves rapidly.
- Overlooking collaboration opportunities with experienced Open Banking entities.
- Disregarding data usage guidelines set by regulatory bodies like the EBA and European Data Protection Board.
Anne-Sophie emphasizes the need for proactive engagement, collaboration, and compliance with evolving data guidelines, signifying the onset of Open Finance. This shift, while challenging, unlocks avenues for collaborative innovation, shaping a promising future for the financial industry.
Source: The Paypers