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Open Banking – Where we StandRichard PeersMicrosoft
Open Banking is Gaining Traction…Europe• PSD2 regulates banks in the EU to grant TPPs** access to payment
accounts for account information and payment initiation• CMA (Competition and Monetary Authority) regulated the 9 largest UK
private banks to form an Open Banking Implementation Entity
Africa• PSD2 is also being watched closely. South Africa may follow• API Banking use cases for financial inclusion gaining traction in Nigeria
North America• NACHA API Standardisation Working
Group (100 banks, PSPs and IT companies to launch 16 APIs)
• US CFPB* pushed for customer-authorized access to data as an alternative to screen scraping
• Open Banking Developer Portals and APIs launched by several banks
• Fintech and Open Banking bill passed in Mexico
Asia• Monetary Authority of Singapore
“Finance-as-a-Service” playbook to boost Open API adoption
• Hong Kong Monetary Authority plans to regulate tier-1 HK banks to open up APIs
• Several Open Banking related GovTech initiatives in India, China, Singapore
Latin America• Retail banking propositions to allow
customers to access account information through Social Media Platforms to view balances and transactions
Australia• Australian Treasury Department to
push for Open Banking regulation by July 2018
• NAB and CBA among the first banks globally to release Developer Portals
*Consumer Financial Protection Bureau – regulatory agency to oversee financial products and services that are offered to US customers**Third Party Providers – such as Payment Service Providers, Account Information and Payment Initiation Providers
Source: Accenture Open Banking for Business Survey 2018
§ Initiatives driven by national or supra-national market regulation
...across the world through regulation and market initiatives
§
§
§
§
§
Open Banking Open Banking | Market UpdateSource: Accenture Open Banking for Business Survey 2018
SME Business 18 34%
Personal – Finance Management 13 25%
Personal – Credit Scoring 5 9%
TBC (Unknown – no clear proposition) 4 8%
Payments 3 6%
Personal – Savings & Cashback 3 6%
Financial Institution 2 4%
Developers – API Services 2 4%
Consent & Identity Management 1 2%
SME Business 3 25%
Personal – Finance Management 3 25%
Payments 2 17%
TBC – Unknown 2 17%
Personal – Credit Scoring 1 8%
Wealth Management 1 8%
ACCOUNT PROVIDERS
2
3
4
4
9
Challenger Banks
Other EU/Global Banks
Other EU Banks/Building Socs
CMA9 Subsidiaries
CMA9
22Total
CMA9 OTHER
days since the start of managed rollout (13 Jan 18)
300
Account Providers (ASPSPs)
22
TPPs on the Open Banking Directory
53
TPPs registered on the FCA Register
65
9 CMA9 Banks & Building Socs 4 Other UK Banks
& Building Socs
AIB
Bank of Ireland
Barclays
HSBC UK
Lloyds Bank
Nationwide Building
Santander UK
The Royal Bank of Scotland
Northern Bank[Danske Bank]
CYBG [Clydesdale & Yorkshire Bank, B]
Bank of Scotland
The Co-operative Bank
Cumberland Building Society
3 Non-UK Based Banks (EU & Global)
ABN AMRO Bank
Bank of Cyprus UK
4 CMA9 Subsidiaries
Marks & Spencer Bank [HSBC]
Coutts & Company [RBS]
Ulster Bank [RBS]
NatWest [RBS]
THIRD PARTY DIRECTORY
53Total volumeof TPPs on OB Directory
Are registeredas AISPs (only)35
16 Registered as AISPs and PISPs
Are registeredas PISPs (only)2
OPEN BANKING DIRECTORY
12 Extra TPPs on FCA Register
Are registeredas AISPs (only)
Registered as AISPs and PISPs
Are registeredas PISPs (only)
FCA REGISTER
3 3
6
14
4 4 3 38
58 7 9
January February March April May June July August September October
TIME OF REGISTRATION – ALL TPPSICBC London [Industrial and Commercial Bank of China]
2 UK Based Challenger Banks
Revolut
Starling Bank
Accenture Report on Open Banking in Commercial BankingTypes of Service Open Banking UK PSD2 NACHA* Mexico HKMA** Singapore Australia New Zealand
Payment initiation
Payment status
Payment account information
Product information
Product opening
Fraud & risk reduction
Customer insights
Credit scoring
Other deposit accounts
Loans
Insurance
Regulation and APIs existing (CMA) or in September 2019 (PSD2) Regulation, Government or Market initiative to provide first APIs in 2018-2020 More traditional scope of regulations
*NACHA API Standardization Group initially plan to publish APIs on Payments, Accounts Information, Account Validation/Tax Payments**HKMA Open API regulation initially plan to push for APIs on Product Information, Product Opening and later on Transactions, Account Information (bank, loan, mortgages, credit card…)Source: Accenture Open Banking for Business Survey 2018
Figure 2: Payments and accounts are key in the first wave of Open Banking globally
Figure 4: Half of banks expect Open Banking for corporates to drive five top 10 percent of their revenue growthWhen percentage of banking revenues growth does your bank expect to derive form Open Banking for SME and Corporate clients over the net 3 to 5 years? (%)
Figure 1: Corporates expect Open Banking to give them greater banking access and a larger reachWhat are most significant benefits to your organization of using an Open Banking Ecosystem platform? (%)
Create a 360-degree view of the client
Monetize APIs Establish revenue-sharing ecosystem’s
Do banking as a platform or as a service
1 2 3 4
5
54
35
6 3
66
29
3 6
4643
6 3
66
29
3
Global NA Europe APAC27
2218
18
15
Global NA Europe APAC28
2617
13
15
1
27
2221
15
1525
2016
23
15
0% growth
Less than 5% growth
Between 5% and 10% growth
Between 10% and 20% growth
More than 20% growth
To gain access to convenient andinnovative banking servicesTo allow us to reach moreclients and partnersTo optimize efficiency of SME andcorporate processes
To reduce the cost of client acquisition
My organization does not see benefits tousing an Open Banking ecosystem platform
To reduce complexity and implementationcosts for bank connectivity
Note: N=100Source: Accenture Open Banking for Business Survey 2018
Note: N=660Source: Accenture Open Banking for Business Survey 2018
“There is a belief that there will be a significant pull-back from a full-stack organization, supporting the reality that many firms believe they can no longer be ‘all things to all people”
Chart 11: Current primary business models and Projections for 2022
21%
27%
21%
17%
14%
20%
33%
18%
14%
14%
0% 10% 20% 30% 40%
Segment-focused organization: Focused on smallset of segments building best-in-class services
Full stack bank: Focusing on all three areas ofdeveloping, distributing and servicing of banking
products
Marketplace Organization: Offering productscreated internally and by outside organization
Distribution organization: Focused onmost efficient distribution and services of
products created by other organization
Manufacturing bank: Developingproducts with distribution led by others
Current 2020Source: Efma-Infosys Finacle Digital Banking Report Survey 2018
Growth ProfitCost
Digital Transformation Growth levers
8
Microsoft Digital Bank & Microsoft Graphs
UX Digital & Intelligent Engagement
Automated, Data Driven & AI infused Business
Payments Future Branch
WealthMgmtLedger
TradingSupply Chain
FinanceLoyalty
World Knowledge
User Knowledge
Work KnowledgeScalable
Architecture, Open Platform
https://fdata.global/about/purpose/
• Adobe/SAP/D365 ODI market and audience insights & campaigns• LinkedIn next generation sales-targeting product providing insights that
will help sales organizations plan and execute their go-to-market strategies
• LinkedIn Sales Navigator for relationship management and new business development , to target, understand and engage), and therefore drive new revenues and increase NPS
New Products New
Services
Products
Investment Bank Commercial Bank Cards Open BankingCommercial
Open BankingRetail
4: Reusable businessservices/capabilities
e.g. Transaction Cycles
5: Geo/Segment/Business line Marketplaces
Customer journeys
The Business Need
Decrease costs
Increase growth
Geographical spread
Diversification
New products
The Business Outcomes
Marketplace
New revenue
Partner eco-systems
Business agility
Product transformation
1: Legacy Systems
Systems ofengagement
Systemsof record
Systems ofintelligence
2: Digital Enablement Cloud
Systems ofdifferentiation
Systems of innovation
3: AI, Data and Integration Hub
System ofReference
The end-user experience
PARTNERS INCLUDE
Investment Bank Corporate Bank Cards Open BankingCommercial Bank
Open BankingRetail Bank
v v
Crédito Agrícola is a private bank with the largest branch network in Portugal. In 2016, there were 821 units (branches or automatic teller machines) in isolated areas where no other bank institution has presence. Crédito Agrícola is one of the leading Portuguese financial groups, with net assets over EUR 16 Billion.• Industry: Financial Services• Market: Portugal• Target Customers: Consumer and Corporate Market• Product Used: Azure API Management, ADFS, Application
Insights, Event Hub, App Service, Visual Studio Online
Credito Agrícola embraces “Open Banking”
The challenges• Open systems to foster a strategy based on partnerships
• Provide digital services using the API ecosystem
• Lead in the core communities providing digital services
•Modernize operations driving DevOps transformation
The results“Microsoft has all the tools we want to use. Microsofthas been with us in this transformation journey as one ofour core partners with people and tools to support us.Microsoft technology is more open to introduce specificfeatures we want to introduce and leverage in ourstrategy.”
Dr. Jorge BaiãoChief Information Officer, Crédito Agrícola
The solutions
Want to learn more? Read : Microsoft on Open Banking
Microsoft helped Crédito Agrícola achieve a...
lowerdevelopment
costsFastertime-to-market
Increase release quality
{API}
API Management and Integration
(Api Design, Versioning, Dev Portal, Transformation,
Protection, Configuration)
Strong Customer Authentication
(oAuth 2.0, OpenId, Multi-factor,2nd Factor App, Social
Identities/On-Prem Federation)
Business andOperational
Power BI Portal For Business and Application Insights For Operational Monitoring
Establish DevOpsDevOps Baseline, enabling
Continuous Integration, Continuous Delivery and Infrastructure-As-a-Code
End-To-End Business and
Operational Visibility
Foster Partnerships
Azure-Generated Results: • Accelerated innovation • Flexible build environment • Scalable infrastructure • Reactive performance • Hybrid connectivity • API-ready • End-to-end fintech solution
Technology Environment: • Microsoft Azure • Azure Active Directory • Azure API Management • Azure Container Registry • Azure Cosmos DB • Azure Kubernetes Service (AKS) • Azure Marketplace • Hybrid Cloud• Open Source
OpenCollaboration
Co-Innovation
Co-LocationCo-Development
Co-Validation Co-Go To Market
Banks
ConsultantsFinTechs,
Developers, ISVs
Universities
System Integrators
The Azure API Management Accelerator Sandbox accelerator
Open Banking – what it means to Paul Bowen
Open Banking – what it means to Mohan Naidu
Open Banking – what it means to Richard Peers
Open Banking – what it means to Thomas Paar
A standardized and secure digital mechanism for sourcing, exchanging and maintaining customer KYC and onboarding information. Visibility of the level of provenance and trust that is associated with customer data — with the customers themselves contributing to keeping their data up-to-date, and a “network effect” created through the participation of cross-industry organizations, such as FIs, utility providers and government agencies
Digital Passport
Personal Data
Company Data
Authorized Users
Accountants
OtherIndustries
Telecommunications
Government
Utilities
Banks
Third Party Vendor
Figure 1: Schematic of the Digital Passport ecosystem
Appendix
Design and Interpretation IssuesFriction free UI will be winnersSome TPP’s resisting re-direct
Exemptions being advocated by FCA to ensure quality standardized API’s
RTS and SCA Status
RTS SCA comes into force Sept 2019Main aim is to reduce fraud in payments
PSPs to ask customer for more information in order to verify their identify before a payment is madeThis ‘strong customer authentication’ will be a requirement unless an exemption is used (e.g., for low value payments)
