Ed Adshead-Grant, the General Manager and Director of Payments at Bottomline Technologies, spoke to PaymentExpert about the current climate for Open Banking in the UK and how it has evolved over the pandemic. 

PaymentExpert: Firstly can you tell us a little more about how you believe the pandemic has changed the discussion for open banking?

Ed Adshead-Grant: The enforced patterns of remote working under Covid has accelerated the digital acceptance of many newer technology and working practices around financial services.

Whether it is the wider adoption of electronic signatures, the raising of risk limits on contactless bank cards or the massive move to mobile banking and secure apps – many of the new behaviours have been born out of the convenience and practicality of working under a global pandemic. 

The availability of the Open Banking infrastructure in the UK, where permissioned activity is only an API call away, has arrived fortuitously at the same time of digital acceleration through the global pandemic. Consumers and businesses have been experimenting out of necessity. New levels of record activity are being seen with API calls doubling every five months and over 450 third-party providers now registered to launch propositions in the Open Banking ecosystem.

PE: What are the technical differences between implementing CoP for PISPs as opposed to banks? 

The CoP solution is an industry initiative to validate intended beneficiaries on both inbound money and outbound money flows.  There is some minor re-engineering in the different phases that Pay.UK have planned into the overall scheme but nothing significant and invisible for anyone buying in the service from an end to end SaaS provider like Bottomline.  Any FCA registered bank that has its own sort code in the Extended Industry Sort Code Directory (EISCD) can join CoP today in Phase 1.  

With Bottomline, the whole CoP service is cloud-driven on our established Open Banking credentials, so it is a 12-week project with minimal work for the banks to complete.  Any entity without their own sort code, perhaps like a PISP, can join Phase 2 of CoP which is planned to open up from the second half of 2021 and for any organisation subscribing to Bottomline, will be a very similar journey with no visible technical differences.

PE: How important is cross border connectivity in the expansion and growth of open banking? 

The open banking movement is irreversible and adds a whole new dynamic into the innovation and competitive landscape of financial services. The UK has led many of the proven implementations for example with the importance of standardised APIs but other countries are watching, learning and already delivering their own open banking initiatives from India and Australia to Singapore and Mexico. 

This brings yet more new ideas into the market which will start to link up across borders as the degree of interoperability grows over time. The PSD2 implementation in Europe for example is already designed to operate across many borders.  

Other nations will review the merits of becoming truly open banking and open finance models beyond passport control, but this will take time and the focus initially is for domestic markets to implement open banking programmes at home.

PE: As we emerge from the pandemic, which fintechs are you backing to thrive and be imperative to the growth of global economies? 

The fintechs that have done well in the last 12 months have proven themselves to have a good mix of a strong business model linked with a robust culture. It’s difficult to grow in any sustainable way without this combination of financial strength and a clear mission for a talented team to drive results in these unprecedented conditions. 

Externally, trust is front and centre for consumers and businesses to use new propositions where their money is involved. If trust is established by fintechs, the new API driven open banking movement creates a rich breeding ground of relevant and compelling propositions.  

The user experience where relevant, real-time data is inserted into the customer journey is enhanced enormously. There is no longer a need to break out into completely different and dislocated banking screens to complete transactions or verify data, when everything can be done through one master window, with one workflow, in one go. The smart fintech that becomes ‘top of class’ wins.

PE: What impact will the growth of open banking have on the fight against fraud? 

The result of the open banking transformation is a massive injection of permissioned on-behalf-of payments (PISP) and data pulls (AISP) by Third Party Providers (TPPs). The activity is tightly controlled in the UK through the secure consent mechanisms set up by the Open Banking scheme and the Financial Conduct Authority.  

This has been engineered in a very robust way and no incidents of incremental fraud have been recorded to date; however, the increased sharing of credentials and the accelerating pace of instant payments make the whole domain of Open Banking an area that needs to be monitored as adoption rates increase. The criminal actors are very creative and always looking to break or circumvent systems.  

With open banking, the ability to call on extra data elements in advance of making a payment makes the API triggered ecosystem an enhancement for more security checks, especially around persistent problems like identity-checking before you commit to the movement of funds.