Highlights from the biggest Open Banking event in Eastern Europe
After successfully organizing an inspiring event in London – Open Banking Reality: Beyond the Noise – and sharing its vast experience with other open banking innovators, Salt Edge was ready for the next step and combined forces with MasterCard and Tekwill to power Fintech Moldova Conference 2020, a platform for discussing fintech trends and strategies on both local and international levels.
This year’s topic Open Banking: From Regulation to Reality was specifically chosen to present the progress of open banking implementation in different regions, including the problems faced and the solutions available. As Eastern Europe is keen in adopting open banking, Salt Edge sponsored such an event to help businesses and regulators apply these innovative ideas without hitting the same bumps in the road. While useful and interesting content was in abundance, here are a few thoughts that simply must be shared:
1. Open banking worldwide
Customer comes first – this becomes the new mantra of financial regulators and businesses all over the world. Canada recently changed the term from “open banking” to “consumer-directed finance”, while Australia made it very clear that customers should have access to all their data such as health and utility data.
“End-customers always pay more than they should,” stated Gavin Littlejohn, chairman at FDATA Global, diving into the topic of financial literacy and financial awareness. Only a small percentage of the population (about 5% in the UK) receive professional advice regarding their finances. So, the best option for most people, he said, is financial management applications, but “they can be only as smart as data you put into it”. This is where open banking and open finance come into place.
Gavin then shares the several main components needed to make open banking work: having in place customer data right (framework), ensuring that customer can grant consent for others to access their data, have in place a liability model that describes who is responsible when data infringement occurs, and then creating a set the legal regulatory frameworks that enforces the previous three points. Currently, Japan, New Zealand and the US are working on creating a customer data framework.
Gavin compelled the market to work together referencing to “a beautiful articulation from the recent Brazilian open banking initiative – the principle of reciprocity”. Only the 12 largest Brazilian banks will be obliged to make the data available and if the 13th bank wants to consume that data, it should also provide access to the information it holds.
Malgorzata Domagala, Account Management & Open Banking, MasterCard Poland, shared the insights on how banking now can become part of value-added services for third party applications. She gave examples of how in Mexico, Uber enabled drivers through its app to open current accounts with BBVA, or that telecoms can add various banking services in their app to be used by customers.
Romania, Ukraine, Russia and Moldova got off to a late start in their open banking journey but they have it all figured out and can move at much faster speed now, having a few great examples like UK’s Open Banking to follow. Romania and Ukraine created associations – RoFin.Tech, UAFIC – grow innovation and digitalization in the payments industry, while Russia launched Faster Payment System in 2019 to enable instant transfers 24/7 and let people manage their data online.
2. Successful open banking use cases
“In Europe, open banking is live for half a year now and we expect it to grow even faster, also in Eastern Europe, including Moldova. We see a positive trend from regulators to implement such technology on the local markets”. Lisa Gutu, Head of Business Development at Salt Edge, shared a few use cases including the ones Salt Edge works on to show how open banking can be implemented.
Money management: as people have several bank accounts and eWallets, this is the most common use case with fintech apps – BudgetBakers, Cleo Chatbot, Oval Money, – and banks like Revolut and BRD Romania.
Lending: banks (CIB Bank), credit bureaus (Crif) and tenant verification companies (Keysafe) use open banking for digitalization and faster decisioning, while SteadyPay provides automatic loans when user’s wage is below average.
eCommerce businesses and airlines already started implementing payment initiation. Data aggregation is also actively used for cashback and loyalty programs, while corporate use cases of open banking include audit, accounting & ERPs and asset management.
Another successful case of open banking implementation – Bofin – was presented by its CEO Mohamed Dafea, who described how the Bofin app uses data aggregation, benefitting users who have access to a wide range of financial products and can make informed decisions.
Cosmin Curticapean, co-founder and CEO at iFactor, dived into the topic of open banking data used for credit risk scoring in the SME lending business segment. In comparison to traditional systems, iFactor uses vast and diverse types of information, including digital footprints, mobile phone usage, psychometry and financial transactions, to help small businesses with no or thin credit files access lending products.
3. What are investors looking for in fintech startups?
For investors, fintech startups are a lucrative bet, so one panel at the conference, moderated by Ghela Boskovich, Chapter Leader and Head FDATA Europe, was dedicated to the topic of psychology behind investing and the responsibility of investors building an ecosystem of the payments market. The representatives of the top investment companies from different countries, including venture capitalists, angel and seed investors, discussed what features investors typically want to see in startups and what a product market fit looks like from various angles.
- People invest in people, not companies.
- It is not about a product but about finding a customer to sell this product to.
- Prepare a plan: it is easier to succeed with a clear roadmap.
Cosmin Curticapean, Business Angel at TechAngels Romania, pointed out that he wants to see expertise and vast knowledge in many fields, including technical and marketing departments, to actually make an investment. “It is not enough to have a great idea, you need to have a great idea that can be executed and built up. Most startups fail after 3 years of existence and 72% of those fail because there is no marketing and therefore no need for their product”.
The purpose behind
Fintech Moldova Conference 2020 was a meetup of people united by one common goal – to make open banking work despite the differences and challenges. Using the shared experience of successful open banking use cases, presented on the stage, it will be easier for the regulators and business representatives from Eastern Europe to collaborate and move at faster speed. By supporting these events, Salt Edge aims to create a community of open banking innovators ready to step forward and see opportunities and solutions instead of problems and obstacles.
About Salt Edge
Salt Edge – a financial API platform with PSD2 and open banking solutions. The company has two main vectors of activity: enabling third parties to get access to bank channels via a unified gateway, and developing the technology necessary for banks to become compliant with the directive’s requirements. ISO 27001 certified and AISP licensed under PSD2, the company employs the highest international security measures to ensure stable and reliable connections between financial institutions and their customers. The company is integrated with 5100+ financial institutions in 70+ countries.
More information: www.saltedge.com
Phone number: +1-437-886-3969
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