On 15th November, our Rockstar speakers took to the FTT Open Finance Stage, to explore how open finance is fast tracking innovation and enabling financial institutions and fintech’s to meet changing customer demands.
Our moderator, Karen Bradbury, Client Manager at Invest Northern Ireland, kicked the panel off by asking the panellists to expand on the key benefits of open finance. One transformational benefit that is clear to all, is the ability to track live data sources and reconcile those in real-time. Banks can access these data sources continuously and in lending, can automate the application for credit process, as well as decision making.
Open banking brings an influx of new data that has previously been excluded. New datasets are emerging. This can trigger the identification of new products and solutions for gaps in the market and improve financial inclusion. New datasets also empower financial institutions and fintech’s to implement modelling and bring new solutions into the banking community.
Although the benefits are clear, there are many challenges as institutions start to utilise open finance. When launching new products in areas that may be more ambiguous, the commercial elements can become more challenging. This is because it is often more difficult to validate a product in a new area when you’re trying to launch an innovative solution.
Another challenge, particularly in larger, more traditional financial institutions, is that transferring to new technology can take a long time. In this time, you need to incentivise teams to adopt and allow for new propositions to breathe, giving them time to show results. There is also the process of the regulatory board and taking time to understand new propositions from this perspective. Overall, when adopting new technologies that implement open banking, a cultural shift within the financial institution or Fintech is needed and teams should be agile and develop new ways of working.
For Michelle He, who is Co-Founder and COO of Fintern, one of the key challenges when it comes to open finance is, how do we extract the signals from the huge amount of transaction data, then understand it and translate it into the features that we offer customers?
Another key challenge in terms of data analytics for lending, is how we make sense of alternative kinds of income. Fintern lends to individuals from the gig economy, who’s income can vary month-to-month. The challenge here is how do we make sense of that kind of income in order to identify the true affordability of this customer and represent the customer’s profile to underwriters?
The conversation then turned to focus on collaboration and how fintech’s can partner with banks. Rather than looking at their offering in terms of the technology itself and what this can do for a bank’s revenue generation, Norneet Singh of Mettle emphasised that fintech’s should build their case around the user journey perspective and how the solution can improve the customer experience.
Jonathan Holman of Santander highlighted the key to partnerships as a situation where a fintech provides non-competitive but complimentary offerings to the bank. In such as case, it is reasonable that the bank should partner to extend their services, as it is not a product they currently provide. Where services don’t overlap and the bank wants to experiment, partnerships make sense.
Listen to the full recording below to hear more about the potential of open finance to fast-track innovation.
Karen Bradbury, Client Manager, Invest Northern Ireland (moderator)
Norneet Singh, Strategy, Planning and Partnership Lead, Mettle
Michelle He, Co-Founder and COO, Fintern
Jonathan Holman, Head of Digital, Santander Corporate & Commercial