REGTECH: OPEN FINANCE
The Open banking was the spark, but how close it is to igniting open finance? Sam Seaton, CEO of Moneyhub, and Jason O’Shaughnessy, Head of International Sales at Envestnet|Yodlee, share their views
Better access to financial services is one of the key benefits of digital transformation. And not just access to basic banking services, but also to a wide range of other products and services that will put consumers and businesses in charge of their finances. First came open banking, mandated in Europe by the revised Payment Services Directive (PSD2) and adopted in 2018, which was seen as a blueprint for open banking frameworks across the world. Now, we’re seeing the emergence of open finance. But it doesn’t end there, according to Sam Seaton, CEO of Moneyhub, the platform that she describes as enhancing ‘the lifetime financial wellness of people, their communities and their businesses’. “To me, open banking is the first step, open finance is the next step, and open data is the third step,” she says. “I call it 1D, 2D, and 3D. Open banking is covered by PSD2 payments legislation, which means all payment accounts must be available to share. My current account, and my credit card are both payment accounts and can be shared with an account information
68
TheFintechMagazine | Issue 19
service provider (AISP) or a payment initiation service provider (PISP). “Open finance takes it a stage further, whereby you can also bring in investments such as your pensions or your ISA. It could also cover your property, or maybe your rental properties. It embraces other financial areas and assets so you can consolidate the information, thus giving you a holistic picture of your money.” Open data integrates every aspect of an individual’s life, all of which, at some point, inevitably interact with finance; although this last is fraught with ethical bear traps and legal impediments. Before the UK left the European Union, the EU Commission announced that it would look at legislation to create a new open finance framework by the middle of 2022. Meanwhile, the UK’s Financial Conduct Authority (FCA) is collating responses to a ‘call for input’ on the opportunities presented by open finance, which it said could make it ‘easier for consumers and businesses to compare price and product features and switch product or provider’, and thus could be ‘beneficial in the general insurance, cash savings and mortgage markets’.
Envestnet | Yodlee, the data aggregation and data analytics platform, has, in effect, been providing data to allow money management platforms like Moneyhub to do much of that for years – but it could be made so much better and easier, says Jason O’Shaughnessy, Head of International Sales at Envestnet | Yodlee. “Open banking gives Moneyhub permitted access to consumers’ payment accounts, but then it also has connections to third parties like Yodlee, which gives it access to other accounts that a consumer might hold, so their investments, mortgages, loans and pensions are all accessible,” he explains. “There are many potential applications that are limited by the scope of open banking. We hope open finance is adopted and made available quickly so we can all start doing things through application programming interfaces (APIs). Wealth management, budgeting, personal financial management: these are the kinds of solution that open finance can promote.” www.fintechf.com