ENTER THE FINTECHS
Open banking depends in large part on
fintechs to develop and deploy APIs; and
despite the pandemic, there has been prog-
ress on that front. Amsterdam-based API
provider Yolt Technology Services (YTS), a
venture of ING Bank, recently announced
coverage increases for banks in Europe. In
addition to 95% of institutions in the UK,
it now covers 90% in the Netherlands and
over 80% in Italy, France and Spain. API
usage volumes remained stable in April and
May after a period of growth, says Leon
Muis, YTS chief business officer.
Indeed, the crisis may help speed up
the adoption of open banking in the long
term. For example, quarantined old-
school clients have been forced to aban-
don cash, branches and ATMs in favor of
digital banking, possibly expanding the
open banking market permanently. Once
allowed to roam, many account holders
may embrace contactless payments on
health grounds.
“With Covid, everyone is talking about
digitization,” says Augusto Lins, president
of Stone Payments, one of the largest pay-
ment providers in Brazil.
Gulamhuseinwala offers a word of
caution: “More users online increase the
addressable market, but that doesn’t mean
they will necessarily adopt open banking
in a couple of weeks.”
Other observers, however, point to gen-
erational differences driving the practice,
suggesting that younger people might even
be willing to use a banking app on TikTok.
At the other end of the spectrum, 99-year-
old UK war veteran Captain Tom Moore
used open banking tools in his successful
effort to raise funds for the National Health
Service during the pandemic.
The Central Bank of Brazil’s efforts
to pursue open banking have continued
apace despite the country’s serious dif-
ficulties addressing the pandemic. The
current drive emerged from an effort
launched several years ago to encourage
financial and social inclusion. Phase one
of the initiative, centered on sharing of
basic financial data, is scheduled to take
effect in November. The program is slated
to be implemented gradually, with full
open banking available in late 2021.
Among other things, the Brazilian
program aims to encourage the provi-
sion of better payment systems for small
and medium-size enterprises (SMEs).
The options currently available to them
from large financial institutions, includ-
ing major-brand credit cards, are expen-
sive and lack transparency, says Lins. Acheaper, more efficient system would
“help them do three things: sell more,
better manage their businesses and grow.”
In many, if not most parts of the world,
the pandemic and lockdowns have hit
SMEs particularly hard. If the Brazilian
program is successful, open banking could
help them weather the storm.
Emerging technology’s potential to
energize open banking helps explain why
two years ago RBS acquired FreeAgent,
an Edinburgh-based cloud accounting
software company, points out Naresh
Aggarwal, associate policy and technical
director of the Association of Corporate
Treasurers (ACT), an international
organization. Taking a different tack to
address the same market segment, the
Dutch accounting software provider Jortt
announced in June that it would create
a partnership with YTS to provide API
technology to help its SME clients access
their financial data.
“If you are running a small company,
you are responsible for a lot of things,” says
Aggarwal. Some administrative tasks up
the same resources at businesses with five
to 10 employees as they do at businesses
with 100, putting the former at a disad-
vantage. Open banking technologies allow
people to do administrative tasks more effi-
ciently, Aggarwal contends. Yet adoption
has been mixed. “I don’t think the market
buys open banking,” says Adshead-Grant.
To get over these hurdles, some experts
say, open banking needs “a killer app” that
will open participation. Both Lins and
Aggarwal mention the widespread adop-
tion of Uber. “One of the biggest chal-
lenges is a mind-set change in the con-
sumer world,” says Aggarwal. Most people
do not understand how Uber works, he
observes; they just care that it does.
Others suggest that open banking may
not truly succeed until the offering moves
to the next step. “Open banking as a stand-
alone has the potential to transform retail
banking,” says Gulamhuseinwala. “But
when it comes to expectations for con-
sumers to be able to see all their data in
one place and make better financial, life and
business decisions, open finance is a must. I
hope it is inevitable.” ■37Adshead-Grant, Bottomline: People are
probably experiencing a bit of a tsunami of
initiatives right now.Aggarwal, ACT: Open banking technologies
allow people to do administrative tasks
more efficiently.Augusto Lins, Stone: With Covid, every-
one is talking about digitization.37