Open banking boosts both fintechs and banks

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Rudy Kawmi, head of Retail Banking Sales across Africa at Finastra.
Rudy Kawmi, head of Retail Banking Sales across Africa at Finastra.

Open banking is bringing together ecosystems that overcome old rivalry between fintechs and traditional banks, and benefit them both. This emerged during a webinar on next-generation banking, hosted by Finastra in partnership with ITWeb.

Rudy Kawmi, head of retail banking sales across Africa at Finastra, said: “There used to be an adversarial view of banks vs fintechs, but we’re now seeing increasing collaboration within open banking ecosystems such as, Finastra’s cloud-based open API platform, which can drive greater benefits to both.”

“There’s always a huge amount of hype around transformative trends, which can sometimes exaggerate expectations, but there has truly been growth in open banking around the world – often with banks trailblazing and bringing regulators with them. There has always been a real emphasis on scale in banking, but more and more it’s not just about how big you are as a bank but rather how quickly you can adapt and respond to changes in the market,” Kawmi said.

Open banking helps enable that agility, he said. But open banking also has to deliver tangible benefits, and enhance the customer experience.

Said Kawmi: “Open banking can make a difference to the lives of the customer, radically improving service levels. Payments, lending and remittance are massive open banking growth areas, but there are also fraud detection, analytics, insurance, blockchain and other niches fintechs are focusing on. Fintech has a lot to bring to the table to tackle specific problems and improve them, and if you put this together with banks, with their resources, scale and trust of the customer, you can see how collaborations can be a net positive situation.”

Bringing together a new ecosystem to drive value, accelerate business growth for all the participants who are involved and improve the customer experience, he said.

Ramy Elkhoulany, principal product manager at Finastra, said Finastra’s banking platform addressed the challenge of how banks could deal with fintechs, overcoming integration and certification challenges. 

“We have grouped fintechs, developers, system integrators, financial institutions, independent software vendors and even university students into one development portal which will support certification and integration. This makes life easier for banks and developers.”

Launched in May 2019, the platform now has 23 applications live, over 1 400 developers, 192 fintechs building new use cases, and eight centres of excellence globally. Combined with Finastra’s Retail Banking core solutions, it enables the quick extension of the bank’s ecosystem, providing new opportunities for revenue growth.

Open banking in action

Russell Taylor, chief commercial officer & director SG NewTech, Software Group, which specialises in last mile technology solutions, said: “Open banking is key – it creates a lot more predictability in implementations. The more open APIs getting out there, the easier it is for the entire ecosystem to deliver the right consumer experience. It allows partners to access information and deploy far more efficiently – especially in the time of COVID-19 when remote deployment becomes even more important.”

Jonathan Somers, Africa regional director, NetGuardians, which has fraud risk analysis applications in the ecosystem, said banks were now finding that it was more beneficial for them to use expert fintech input and experience instead of trying to do everything themselves. “We are seeing many of them opting to get the fintechs in for particular areas of expertise; and security concerns and integration are no longer the challenge they were pre-APIs.”

In fact, according to a survey carried out by Finastra earlier this year, out of 774 banks surveyed around the world, 86% are looking to adopt open banking in the next 12 months.

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