FDATA Global Summit 2019: a substantive discussion about the global adoption of open data framework
A serious and solid gathering delved deep as to whether Europe needs a payment scheme vs just standards, whether it should instill standards rather then leave those to be decided by the market and how to progress from opening up payments to savings, investments… and electricity in Australia.
I am lucky enough to have got to know Gavin Littlejohn , who is the founder of FDATA Global, introduced to him by Aden Davies who I can’t thank enough, in 2017. Gavin received me as a fintech envoy at a UK Government fintech conference in London. I am enjoying the collaboration and contributing where I can with my international experience of working with incumbents and challengers alike.
The premier event in the beautiful McEwan Hall in Edinburgh last year kicked off a discussion as to how to reconcile the mandated openness of user accounts and ability to make payments independent of the bank with the user experience people want and with connect the new ability with user-cases far from the world of finace.
Prospects were uneven: after the adoption of PSD2 and the CMA9 process legislation struggled, challenged by disparate views regional powers had about the technology and standards that should be used to allow 3rd party service providers to connect to the banks infrastructure.
There were conflicting messages from legislation as well, when PSD2 was announced simultaneously with an interchange cap — relegating new payment systems to the tragedy of the commons — the need to operate a competitive new system at a cost where the old ways allowed everyone to profit. GDPR legislation, while equally important in the world where private data is increasingly misused, created additional roadblocks, where openness of PSD2 conflicts with the need to vet all connections through risk, else the originator of data be heavily penalised.
Early standards were prone to errors, payments had a poor rate of completion, APIs struggled to maintain high bandwidth, UX was bad and overall communication lagged. Yet such are often the challenges for all massive changes in big bureaucracies, and EU is one. Still, 2010 demonstrates solid progress on all fronts: from robustness of tech for account information services and payment initiation, use-cases identified by banks and startups involved in the interaction process, gradual improvement and evolution of standards, maturity of governance and liability models — and transition to other verticals: allowing the world of open finance to become connected to the world of micro-economic data.
DAY ONE | WEDNESDAY, DECEMBER 4 10:30 Chair’s Welcome and Summit Introductions
Gavin Littlejohn (UK) — Chair, FDATA Global noted a more robust and better developed open finance industry as it moves forward allowing the creation of a true data movement. Lessons learned about technical and operational connectivity would allow new data domains to be set up properly.
Do you need to get user content if their data, even anonymized is to be used in other use-cases. We know of experience where professionals proven the data can be deanonimised
10:45 Keynote: The Future of Open Finance
Imran Gulamhuseinwala (UK) — UK Open Banking Trustee, OBIE, where his lasy-year’s keynote was about the future, this time he talked about the present:
2020 is the year when we are able to finish the job and when we see the beginning of user adoption also allowing us to see the vision — beginning to make sense.
Open Banking in practice is coming together around a powerful usecase: mobile — app-to-app redirection drives adoption, in synch with solidifying behaviour of consumers to rely predominantly on mobile channel. 50 per cent increase in conversion rates is thanks to mobile cases, and, also, 50 per cent of interactions for Open Banking happen on mobile. Functionality like real-time authentication and refunds are and should be addressed to improve the success rates and conversion rates. Performance should be of sufficient quality.
The improvement of the system owes it thanks not just to bank members, but to a healthy and vibrant ecosystem for 3rd Parties including banks: over 100 3rd parties are now part of the ecosystem at various stages of approval.
They are practically in charge in defining new user-cases for OB such as overdraft unbundling, budgeting, affordability at 1 click, measuring access to credit and helping vulnerable customers. This solidifies the case for OB and drives demand for both standard API calls and premium one, that banks would be allowed to charge for (premium APIs): currently the system receives close to 200 million API calls per month, the number doubled in several months, with hundreds of thousands of users consuming services via over 75 AISPs that have adopted standards, covering over 95 per cent of current accounts in the country. The formulation and upkeep of a technical layer also allows resilience and uniformity: allows simpler implementation and lowers risk.
This advancement, according to Imran, was possible, compared to EU malleability, because of mandated formation of scope and standards — a simple call to arms is futile, a reason why original intent to produce OB in the UK took 5 years without real progress under the banner of Midata. The momentum should be protected, fostered to allow so much more: OB should cover savings, savings, insurance — added services on top of payments that really make the difference.
11:00 PANEL ONE: The Customer Data Right and Open Finance
• Ghela Boskovich, Chair (UK) — Founder, FemTechGlobal
• Scott Farrell (AUS) — Author, Australian Government Review into Open Banking
• Pralhad Giri (NEP) — Deputy Director, Finance Company Supervision Dept., NRB Bank
• Philip James (UK) — Partner, Sheridans
• John Pitts (US) — Policy Lead, Plaid
• Cynthia Rudge (CA) — Head of Open Banking, Dgen
Ghela Boskovich, a formidable fintech expert with a sharp mind and moderation talent to match, led a international fintech panel to compare notes about what different countries doing with regards to OB and how it motivates to explore new domains that can merge with the power of financial data.
Canada potentially leads the example where improving adoption of Open Banking (see a post from last year above, that provides info about Canadian market) connects with a signed digital economy charted, supported by 150 executives of various Canadian businesses.
Australia, enjoying NPP (next payment platform) and early head-start with open banking concept also has a near unique characteristic, being a concentrated market (that one one hand allows to move fast but also means high liquidity concentration risk — hence the motive by the government to push the banks to do something). A combination of steps: a threat of a penalty tax for concentration risk, consultation paper on competition and account market openness helped. Originally, data has never been exchanged or connected across sectors. One of the big changes the country is going for is to allow the investment in open finance to be used beyond finance. Banks involvement in all industries in Australia allows for that — and so the open data concept is being migrated onto the electricity market, and there are applications in familiar domains like pensions.
One cannot be too exuberant though, expecting quick wins and openness in all consumer-facing sectors: eg., in Australia data literacy is far worse than financial literacy, pointing to potential new global challenge. But, fostering liability and governance around different types of data and how they are attributed and managed could help develop the practice beyond finance. Action and permissioning and ownership can be separated. Create a governance model on how to share data and solve the problem of attribution later.
12:00 PANEL TWO: Open Finance for Society
• Jane Barratt, Chair (UK) — Chief Advocacy Officer, MX
• David Dalton-Brown (UK) — CEO, TISA
• David Ehrich (US) — Executive Director, AIR — the Alliance for Innovative Regulation
• Bill Roberts (UK) — Head of Open Banking, CMA
• Arjun Singh (IN) — Asia Managing Director, Envestnet | Yodlee
• Tatyana Zharkova (RU) — Managing Director, Russian Fintech Association
Jane Barratt lead the next panel uncovering stories as to how the new openness favour society and lead to change as to how end users select and consume various products and services. The panel noted the advantage allowed by the developing liability model in the open standards and SLAs — auxiliary segments of the money world beyond PSD2 — ie, pensions are already taking up the concepts and standards adopted by open banking.
The global market will take several revolutions of the planet to allow to see first results: the regulation is abobut “not planting an egg but planting a forest”. In terms of relative progress, it is going well but in absolute terms the regulation and the progress have barely scratched the surface.
One supposition by the panel was that Open Banking needs to be better communicated in terms of where is it heading. Define a common model of what the end for open banking will go in certainty so that 3rd parties would prepare.
India progress with Open Banking is patchy: the consent and aggregation parts are largely done and will be implemented by end of Q1 to be implemented.
Russia admits the importance of having a common standard that is being pushed by the Central Bank, being one of the organisers of the financial service industry Russian FinTech Association (disclosure: I was part of the workgroup to start it and led the open banking / faster payments international markets research). It is currently working on the user consent part, discussing with members the step of one required to become accredited to work with users. One should add though that Sberbank sees the market different, since the very proposition of open standards threaten its dominant market position (where the bank tries to prove the alternative way of building a national Chinese-style ecosystem to prove the open approach wrong). Open finance in Russia is bent to demonopolize the market where 97 per cent of mortgages is done by 3 banks, 67 per cent of salaries managed by 2 banks.
UK provided an interesting perspective with financial advice, with ca. 8 per cent of UK consumers being able to receive it, leaving 40 million adults who don’t get aggregated data and cannot get a backed up advice. Being able to collect data and process and project an insight is often a first step to progress on to savings and lending.
The transactional data is vital for alternative credit underwriting — helping individual decisions but in aggregate it can help macro-decisioning as well: allowing regulators to have a systemic view of the market. This reminds of attempts to measure GDP by informal data — like Chinese did (and do) by measuring lighting density at night.
Data has the potential to redesign services to begin with — here we can borrow from the world of architecture where a famous engineering company, Arup, started 3d printing steel joints that survive more pressure than traditionally designed joints.
Opening up data has the potential of disrupting the vertically integrated walled garden approaches built by tech giants, enjoying disproportionate arbitrage effects.
14:00 PANEL THREE: The International View of Open Finance
• Steve Boms (US) — Executive Director, FDATA North America
• Rahal Joshi (IN) — Chapter Lead, FDATA Asia
• Gavin Littlejohn (UK) — Chairman, FDATA Global
• Julie McKay (AUS) — Chapter Lead, FDATA Australasia
• Michael Salmony, Chair (GER) — Exec. Advisor, multiple European decision-making bodies
• Akira Yamagami (JP) — Managing Director, NTT DATA Institute of Management Consulting
One could say that striving towards openness has been in the dna of the web and that Open Bankiing from late 1990ies in the US market and in certain european markets like Germany with its FinTS standard allowed some form of unversal access to consumers data. It gave them some agency to allow them to receive information, but the difference with PSD2 allowing a universal way to do that now, this ability in the US or Canada has never been standardized.
Informal bilateral arrangements has been done haphazardly — employing different methods. This allowed banks to decide what standard to enforce and negotiate and became a form of pseudo-regulator that asks 3rd party service providers to conform to the chosen standard.
EU: What was also important is the progression from standards to specifications. Where originally European regulators believed the creation of Open Banking UK was an overkill and that democratic EU process should sort out the best way for the market. Yet the UK proven the EU wrong on this.
India is progressing fast in terms of uptake and using standards, technologies and now open banking to connect a dominant share of population from what was originally 30 per cent several years back, much to the joy of Michael Salmony saying India probably does not need Libra.
Australia: Slated for February of 2020, substantial sharing of data to happen in Australia with 3 or 4 banks ready to go with initial data-sets exchange. Mortgage accounts optional but will probably kick in by mid of next year. What is important for public trust, Austrialian rulebook employs no acronyms like PISP and AXAISP gibberish (calling these account user etc).
Japan: 80 per cent of Japanese banks are ready to open — but voluntary based. Number of fintechs is lower, hence the concentration of banks makes it less prone to open up due to internal pressure.
US: PSD2 and GDPR — incredibly fragmented regulation framework in the US. Regional and Federal and privacy debate is locked in the legislative setup. Developing a standard model so that other industries could also benefit from unified approach.
Day 2:
09:00 PANEL SEVEN: Data Sandboxes, Regulatory Sandboxes and Test Environments
• Liz Brandt (UK) — CEO, Ctrl-Shift
• Brian Costello, Chair (US) — Vice President, Data Strategy, Envestnet | Yodlee
• Ian Major — Chief Business Officer, Runpath (part of Experian)
• Alex Roy (UK) — Head of Consumer Distribution Policy, FCA
• Ochiai Takafumi (JP) — Partner, Atsumi & Sakai
• Kevin Telford (UK) — Board Advisor, GOFCoE
Trying to demonstrate how can users manage their data (Ctrl Shift did a sandbox for British Government on how to manage data). Help businesses and consumers unlock the power of data for good. International rule of conduct and how auxiliary domains impact that. Misusing the data, identity theft. Testing if a platform is secure, what legal model can be made around the data pooled from various resources and how the user experience.
Regulator views and objectives are often different, so aligning is important. How stable is the system, how robust and vibrant is the interaction, acceptance and interest from the users, what the expectations are and how to proceed with authorizations so that services develop would both adhere to the rules and meet the expectations.
Legislation will always be behind on what goes on in the market so starting with principles and values is much more important
Intervention stack — how would one design a system about a new challenge, behaviour. How to instill governance. Which bits can one solve with labels and user experience to at least narrate a behavior. First developing principles and values around a behavior is more important than legislation. Legislation is always behind.
10:00 PANEL EIGHT: Identity, Consent and Customer Experience
• Ralph Bragg (UK) — Founder and Partner, RAiDiAM
• Miles Cheetham (UK) — Head of Propositions, OBIE
• Tony Fish (UK) — Founder, Digital20
• Emma Lindley (UK) — Co-Founder, Women in Identity
• Rob Kotlarz — CEO and Founder of Digital Identity Net
• Don Thibeau, Chair (US) — Executive Director, The OpenID Foundation
Instituting a value exchange to allow users to what is traded for their consent to give their identity and manage the personal data.
11:30 PANEL NINE: Architecture, Systems Design, Security and Standards
• Torsten Lodderstedt (CH) — CTO, yes.com
• Wijnand Machielse (NL) — European Markets Director, SRC Security Research & Consulting
• Joao Martins (UK) — CTO, Yapily
• Chris Michael, Chair (UK) — Head of Technology, OBIE
• Toshio Taki (JP) — Board Director, Money Forward
• Nick Thomas (US) — Co-Founder, Finicity
Creating a unified standard model around which building balanced ecosystems is better. Less skewed with little chance for abuse. Creating standards that would also push the market. Sunk cost fallacy is something that drags progress. Educational use cases are also important to drive adoption.
12:30 PANEL TEN: Open Finance Implementation, Conformance, Performance and KPIs
• Joan Burkovic (FR) — CEO and Co-Founder, Bankin
• Ed Colley, Chair (UK) — Programme Director, OBIE
• Arturo González Mac Dowell (ES) — President and CEO, Eurobits Technologies
• Bill Jetter (US) — Manager, FI Integration and Technical Partnerships
• Matt Schofield (UK) — CTO, Credit Kudos
• Francesco Simoneschi (UK) — Founder and CEO, Truelayer
Enabling a commercial relationship while cutting the time for bank data to become available to 3PPs as well as institute commercial relationships between small fintechs and banks in audited way through intermediaries.
14:30 PRESENTATION: Global Open Finance Center of Excellence (GOFCoE) Gavin Littlejohn (UK) — Chair, FDATA Global
One the second day Gavin gave an update on the created centre of expertise focussed on using open data marts for a range of utilitarian tasks.Gavin gave an update about the created GOFCoE announced on the stage last year — to safely unlock the economic value of data as a force for good. The high-level concept of the Centre is to aggregate transactional data from payments, investment and insurance and employ ML mechanisms available examine the output: gauge from the microeconomic perspective the decisions people and produce vital macro decisions, generate economic insight data to inform the policy rather than rely on theory.
This is an important work with a number of caveats seeing how algorithms could be tainted:
