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DirectID Report: Frictionless Finance July

Welcome to the Frictionless Finance Report, our monthly look at everything new in the world of Open Banking, FinTech, and consumer experience. This month we examine whether all companies should consider becoming a FinTech, the race to digitalisation, and the launch of Open Banking in Australia. 

Open Banking 

As the UK alongside all other major economies continue to suffer the fall-out from continued exposure to the global pandemic, experts and pundits continue to discover how Open Banking can help both consumers and businesses through the financial crisis.  

This week in the Frictionless Finance Report, we cover articles which consider a range of different use-cases, all of which can support the economy. We examine Open Banking’s uses across payments, how it can help consumers save, and its impact upon merchants, amongst others. 

First up, two articles in, that explores Open Banking’s impact upon the payments sector. While the former discusses many of the potential benefits to be found from using Open Banking in payments, such as having better access to analytics, frictionless access to invoices and accounting platforms; the latter goes on to discuss the importance of APIs through the payments process.  

Alessandro Petroni, head of financial services strategy at Red Hat said: 

Banks that are offering services through APIs should first focus on tangible benefits that their customers will receive. This includes early recruitment of third-party applications and services that demonstrate concrete value for their customers. They will need to build awareness through both promotion and education.

The Covid-19 pandemic has undoubtedly had a detrimental effect on the personal finances of many thousands, if not millions, of Brits. Speaking to AltFiAndries Smit of Upside, discusses how Open Banking could yet help the population save money. 

Saving needs to be as frictionless as possible, and Open Banking is one way that could help individuals save with minimal effort. Indeed, there are a number of apps. already on the market that help savers in just this way. 

The role that Open Banking can play in the support offered to business, has also been highlighted by the Financial Conduct Authority 

Maha El Dimachki, head of payments at the FCA said:   

… We have also seen open banking being used to help consumers and businesses during the crisis, for instance, to facilitate evidencing revenues for self-employed [individuals]. In addition, a number of these firms have lifted fees to help their customers or facilitated the use of open banking, such as payment initiation, for making donations to charities.

There have been a number of articles written over the last month that highlight the distance that Open Banking has travelled over the last two years. This is highlighted in articles this month in Global Banking & FinanceFinTech Futures and Finextra 

These three articles give a mixed review of the distance travelled. FinTech Futures, while noting the volume of API calls that are now being made through Open Banking, has a somewhat pessimistic note which focuses on the reticence of the big banks to fully embrace Open Banking.  

Global Banking & Finance focus on Open banking from the perspective of the consumer, and, like FinTech Futures, pays particular note of the introduction of the Open banking app store, launched last month by the OBIE. This article argues that is necessary for banks to embrace the concept, and the insights that they can gain on their customers. AI, machine learning and big data will be key to succeed at this.  

Finally, Finextra ask whether banks, and those working within banks have the required foresight and knowledge to truly understand what it is that customers want, and then be able to implement this to satisfy that need.   

Best of the rest in Open Banking: 

  • Could Open Banking be the panacea that all stressed out Marketer’s need? Finance Derivative explores further.   
  • Experian discuss the move from Open Banking to Open Finance in AltFi 


Author: Kenny Pattie, Content Marketer at DirectID

Read the full report here

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