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2018 (1)
Giles Sergant

Giles Sergant

Director at Consultant
Message Message me Posts: 1 Comments: 5
Bio I've spent the past few years advising startup banks on payments & identity architecture, tokenising mobile payments & PSD2. Founder of Touch2id


Open Banking

The CMA's Open Banking 'nursery' is playing fast & loose with Customer Consent

02 Feb 2018

You'd be forgiven for thinking this long awaited and highly revered era of 21st Century 'Open banking' that's just been ushered into the UK with a spirited shove-in-the-back by its Competition & Markets Authority (CMA) hasn't exactly captured the public's interest. Open Banking is the central plank of the second most significant payments dire...


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Digital challengers leave incumbents trailing in Best British Bank awards

  After 3 or 4 years hard effort, which in some cases included an unrelenting fight just to stay in the game, it’s encouraging to see a number of indicators pointing to meaningful traction amongst the first wave of challengers (Class of 2014/5). The developments in the past 5 years of the Fintechs and Challengers with ambitions in the UK retail banking market have acted as zero investment proof-of-concepts for the CMA9.  The so called ‘disrupters’ have usefully proved customer demand for new elements that can add value to banking apps.  These include the ‘pulse’ balance line (Monzo), card freezing (Revolut), the aggregated ‘single customer view’ (Tandem) and not least the ‘Marketplace’ concept (Starling). In 2018 we’re just starting to see big banks following along with Barclays card freezing, Lloyds doing account aggregation, HSBC integrating FPM and First Direct moving towards a ‘marketplace’ model.  Fair to say that PSD1 has proved some moderate success here as they would never have got there that quick. Looking on: the UK’s premature entry into Open Banking is likely to give the Challengers even more of a boost.   The CMA9 are getting increasing lost in the squabble around how an unknown, untrusted and frankly unwelcomed TPP can be consented and then access the ASP's customer account.  It’s one that will continue to distract for the 18 month clock that is now running since the EP&C approved the key Technical Standards for Open Banking last week. This is a real opportunity for the Challengers (non-CMA9) to compound their momentum over the incumbents by concentrating on a more collaborative approach with symbiotic FinTech alliances that are able to become PSD2 compliant by September next year.  This is cutting a much happier path and one that in time the bigger banks are likely, again, to follow.  

Fintech revolution fizzles as startups seek engagement with banks

  Precisely so.   The idea that a bunch of FinTechs could just turn up and earn a living sitting atop an incumbent ASP platform whilst fishing from their pool, when the immediate returns of engagement for the ASPs was all cost and zero income, was naïve in the extreme.   FinTechs with such an MO are unsurprising now grounded: caught up in the enduring saga of how that’s all actually really and truly going to work.  Fair to say it's currently akin to a playground tantrum … “he was my friend but now he’s both our friends, so who gets to sit next to him at lunch and break?”.    The ongoing squabble alone as to how a customer consents a TPP looks set to rumble along for a couple of years and let’s not even go into how the TPP then accesses the customer’s account once consented.     This is in all in stark contrast to the Open Banking scenario where both TPP and Bank mutually reap benefits from a symbiotic alliance ….    Whilst much attention is paid to the debate engaging the EBA, the EC, the ECB, the ERBP, the European Fintech Alliance and more recently the new ‘API Evaluation Group’ … Challenger banks offering current accounts such as Starling and Monzo are quietly getting on with the business of forming mutually beneficial alliances with TPPs and developing a platform to deploy new live services devised by, inter alia: TrueLayer, Flux, Tail, PensionBee, WealthSimple, MoneyBox, Yoyo Wallet, Yolt, Habito and Kasko.  Many of which they have already taken live.     I particularly like the Flux solution.  They capture SKU level data at point of sale (via software integrations) to enable digital e-receipts which they route back to the card owner's bank (via API) so that when the card holder clicks on that £127 spend at M&S that's tuned up in their bank app, not only are they reminded what it was for, but it usefully also acts as their proof of purchase for return or exchange.    Kind of incredible isn't it that we’re only just getting to this in 2018 but that's an aside, it’s a fine example of an overlay service where the retailer, the Fintech, the Bank and the customer all get to benefit and that's where the future of Open Banking surely lies.   Worth noting too Flux achive that without using an API that is the product of the vast Open Banking machinery (OBIE for UK) because it's what I’d call a ‘permissioned-API’ being agreed upon by the TPP & ASP, who both stand to benefit.     In the case of Starling say and their fresh approach using 'MarketPlace' philosophy .... maybe the early bird really will get the worm?   With respect to the CMA9 in the UK's example and perhaps beyond: once the fighting's over and the music stops Banks will perhaps at least be equipped with a secure interoperable API platform and can focus on the task of recouping construction costs by developing new revenue streams.   A secure API network will be capable not just to connect TPPs & ASPs but to handshake with wider business and Gov’t entities for Non-Financial token exchange.  Non-Financial APIs might well be the unintended consequences – banks taking an identity arbiters role via attribute management for instance, but that's of course if they get off their hands in time before others do it for them.  

European Fintech Alliance raises bank API fears

  They (TPPs) don't have much to worry about, the likelihood of an exemption granting is some way off.  The EBA wrote to the EC a month back complaining about a number of aspects included by their 11th hour changes before submitting to the European Parliament & Council. Included within their concerns around Article 33 for exemption granting was the small matter that one of the conditions laid down upon the Competant Authority was that the dedicated interface "has been designed and tested in accordance with Article 30 (5) to the satisfaction of the payment service provider (TPP) referred to therein". To the "satifaction"? The EBA went on to say "this is of particular concern, inter alia because this provision appears to make the eligibility for the exemption to a legal requirement of one category of providers (ASPs) contingent on the 'satisfaction' of another competing category (TPPs) and does so without specifying how CA's (Competant Authorities) and the EBA are meant to establish said satisfsction". Their letter also added that the provisions lay down that each CA should consult with the EBA for every exemption attempt and that neither the CA's in each geography nor the EBA had the preequisite specialist IT resources and competancies to test each PSP and its IT system individually (potentially up to 6,000 ASPs). The EC responded last week but their response was silent on this particular matter. Will this simply be waived on thru by the EP&C?