Open Banking

This content was recently presented by our friends at FDATA North America to one of the big 5 Canadian banks.

How Consumer Financial Data Access Works Today

• šCredential-based authentication – “screen scraping”š
• Some FIs restrict or block accessš
• Messy, uneven consumer experience
• šLimited visibility into the ecosystem for FIs and regulatorsš
• But the only way for Canadians to reliably use third-party tools today

What is Open Banking?

For an open banking framework to deliver on its benefits, it must secure customer trust by ensuring appropriate privacy safeguards and consumer protection as well as support the safety and soundness of the financial sector. 

Standardized:

• Guaranteed data right for consumers
• Consent and authentication flows
• Liability modeloInteroperable technology to consume data
• Regulatory oversight of third parties

The consumer is fully empowered.

Why Open Banking?

• Under an open banking framework, consumers and businesses are empowered to share their financial data with a broader range of financial service providers. 
• Open banking systems incorporate effective safeguards that ensure the stability of the financial system, protect consumer privacy and rights, and ensure the security of consumers’ financial information. 
• Open banking holds the potential to reduce consumer costs, improve their ability to manage financial services, and gain access to the wider range of services in the ecosystem while ensuring protection, proper regulation, and stability of the financial ecosystem.
• FDATA NA members today provide ~3.5 million Canadians with aggregation-facilitated access to third-party technology tools. 

Benefits of Open Banking

Consumers will receive better customer service, personalized intuitive financial products at lower prices and improved financial health. 

Businesses will be able to use technology to streamline financial operations, improve cash flow and financial management and gain better insight into their customers by understanding how, when and where they will spend money.

FinTechs and innovators will revolutionize how people and businesses spend, manage, and understand their finances. oOpen banking provides a wider range of marketplace participants with access to consumer financial data that can be leveraged to develop products and services that are more tailored to consumer and small business needs.

Banks will reimage their business model to generate new revenue, provide a broader suite of products and services without the burden of building and maintaining proprietary solutions, and deliver better customer service by leveraging data insights.

Regulators will leverage technology and innovation to improve effectiveness through tools like automation, artificial intelligence and predictive analytics. oAs the number of fintechs grow and introduce new business models and techniques into the ecosystem, regulators can rely on open banking to adapt to those new models and ensure regulatory compliance. oRegulatory oversight is needed to understand how existing policies apply to the changing financial environment and account for new risks.

The Global State of Open Banking

• Policymakers are realizing the open banking regime enables significant innovation and consumer benefit.
• Various markets around the world are considering, adopting, and/or implementing laws and regulations to support open banking systems.
• This movement is the result of advocacy by consumer champions, fintechs and other engaged stakeholders.
• Successful regimes focus on the importance of protecting customer interests and their rights to data, while delivering in a way that promotes a secure and safe ecosystem.

Open Banking Flourishing in the UK

• 2 million users
• 200 regulated providers
• 204 third party providers + 76 account providers
• 92 regulated entities with at least one proposition live with customers

Status of Open Banking in Canada

• Four million Canadians have signed up for “screen scraping services”
• First introduced in Budget in 2018
• Finance Canada’s Initial Consultation on Open Banking Finished:
  • FDATA North America engagement in roundtable discussions
  • FDATA NA submission was published informal consultation
• FDATA North America Discussed the Benefits of Open Banking:
  • Educated and engaged with regulators, parliamentarians, and representatives from Canadian financial institutions on the importance of open banking and a well-controlled system of permissioning financial data access following the introduction of the consultation report
• After a brief hold due to COVID-19 pandemic, Finance Canada resumed virtual consultations in November and will continue engagement through the end of year 

Consumer-permissioned data is the lifeblood of financial technology tools so we’ve featured some of the top open banking movers and shakers here!

Last month we joined our technology partner Fiserv on the virtual main stage at API World to discuss how financial data aggregation works, its benefits and real world use cases. Here’s a summary of what we shared with a focus on payments:

Why It Matters – Consumers Want Enhanced Experiences

• Over 50% of consumers agree a personalized financial dashboard will save them time, be time well spent and make them feel confident in achieving their financial goals.

• More than 1 in 4 consumers want you to recognize patterns over time and provide relevant recommendations based on those patterns.

• 26% of consumers value sophisticated suspicious activity monitoring possible through an aggregated dashboard of their finances.

• 66% of consumers are interested in aggregated statements to track spending across multiple accounts.

What Is Financial Data Aggregation

Financial data aggregation enables financial technology companies to empower their users to give permission based access to data related to checking accounts, savings accounts, investment accounts, credit card accounts and more to provide optimized finacial products and solutions.

How Does Data Aggregation Work?

Aggregation is the process and methods by which data from multiple sources are collected, standardized and made available through a common interface. Here’s how the process works:

Aggregation in Action – Faster Payments 

The Challenge

VoPay wanted to enhance existing EFT / ACH payments by verifing:

• Contact information for KYC and fraud prevention purposes

• Funds before initiating EFT/ACH transfers 

• That a transaction occurred

The Solution

VoPay’s Intelligent EFT / ACH (iQ11) payment service offers:

• North American wide bank and credit union coverage

• Quick and reliable data access for optimal user experience 

• Full white labeling capabilities for a flexible design

• Consistent data security and integrity

You can learn more about VoPay’s open banking payments solution here.

In the summer we released our first quarterly ‘Open Banking Movers and Shakers‘. We’re pleased to share an updated list with several new additions. Welcome Wealthsimple, Borrowell, Financial Data Exchange, Payments Canada and Marble! All the organizations below have helped make 2020 the biggest year yet for open banking (AKA open finance or consumer-directed finance). Current projected open banking growth through 2026 is over 24%, reaching $43.1 billion in value.

We’ve listed everyone below that’s included in the graphic above for your browsing convenience. Want to be included in next year’s ‘Open Banking Movers & Shakers’ list? Send us an email at: press@vopay.com

Data Networks

•  Envestnet Yodlee

• Flinks 

• Fiserv

• Plaid

• MX

• Inverite

• Direct ID

• M Science

KYC/AML

• Equifax

• Experian

• Transunion

• Trulioo

Lending

• Quicken Loans

• Kabbage

• Marble

Spending / Savings

• Mogo

• EQ Bank

• Petal

• Borrowell (NEW ADDITION)

Payment-As-A-Service

• Interac

• VoPay

• Trustly

Investing

• Betterment

• Morningstar

• Wealthica 

• Quest Trade

• Wealthsimple (NEW ADDITION)

Accounting

• Xero

• Intuit

Policy / Data Standards

• FDATA North America

• Fintech Growth Syndicate

• Canadian Lenders Association

• Financial Data Exchange (NEW ADDITION)

• Payments Canada (NEW ADDITION)

In recent years open banking has become associated with the digitization and transformation of the financial services sector. New regulations have been one of the major drivers, starting in Europe before quickly spreading around the world.

Open Banking has the potential to accelerate the quality, competition, and distribution of financial services for both individuals and business. On the heels of milestone acquisitions by Mastercard and Visa of Finicity and Plaid respectively, fintechs are hurrying to build financial data rails across African FIs and beyond.

Which regulatory frameworks are enjoying the most success? What are the unique challenges in establishing financial data connectivity on the continent? Who will be the next Plaid of Africa? Find out by registering for the CLA’s Global Open Banking panel on October 15, 2020.

Below is a look at the current state of open banking around the world:

Also, next month our Founder & CEO Hamed Arbabi will be joining Microsoft and Payments Canada to discuss the current state of open banking in Canada and what the future holds. Register now for the panel discussion and learn more about our open banking payments solution which allows you to accept instant bank account verified payments, improve funding speed and reduce NSFs with sufficient account balance visibility.

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In a recent infographic we looked at some of the open banking gains seen around the world including an expected growth rate of 24.4% by 2026 reaching $43.1 billion in value. Lets look at North American companies and organizations who are helping move open banking forward to create a consumer friendly future for financial data that is secure and helps deliver exceptional products and services.

We’ve listed everyone below that’s included in the graphic above for your browsing convenience. Want to be included in VoPay’s next ‘Open Banking Movers & Shakers’ list? Send us an email at: press@vopay.com

Data Networks

•  Envestnet Yodlee

• Flinks

• Fiserv

• Plaid

• MX

• Inverite

• Direct ID

• M Science

KYC/AML

• Equifax

• Experian

• Transunion

• Trulioo

Lending

• Quicken Loans

• Kabbage

Spending / Savings

• Mogo

• EQ Bank

• Petal

Payment-as-a-Service

• Interac

• VoPay

• Trustly

Investing

• Betterment

• Morningstar

• Wealthica 

• Quest Trade

Accounting

• Xero

• Intuit

Policy

• FDATA North America

• Fintech Growth Syndicate

• Canadian Lenders Association

Significant pain points persist with business payments but with continued growth in open banking adoption more business then ever are realizing the benefits of embracing the technology. Open banking is projected to have continued growth well into the future. Let’s have a look at some of the numbers below in our latest infographic:

Help Shape The Future of Open Banking

VoPay is a proud FDATA North America member. Learn about membership benefits here.

Welcome to our new ONE:ONE blog series where we sit down with thought leaders and pioneers in the fintech, payments and open banking space.

Our first chat is with Lloyd Evetts, Director of Business Development at Inverite, a leading open banking provider with coverage for over 275 Canadian Financial Institutions. 

Q&A

1. What’s one thing everyone should know about Inverite?

My two partners and myself have each been involved in Financial Technology for over 20 years in payments, lending and now data aggregation.  One of the first questions I’m usually asked is how we have support for so many more FI’s than anyone else – experience goes a long way!

2. What’s your role at Inverite?

My role here is split between product management, business development and operations.  My background in IT has proven to be a great strength too, I work very closely with both our and our client’s technology teams and understand what goes into an integration and how the data is used.

3. What gets you most excited about the VoPay Inverite partnership?

I think the payments space is poised to see the same kind of radical change that we saw in credit decisioning with the introduction of open banking, and I think VoPay is at the forefront.  I’m excited to see how our data and coverage can help them innovate.

4. What does the future of open banking look like?

I’m optimistic that we’ll see a collaborative landscape where the incumbent FI’s and Fintech’s work together and we really unlock the potential of open banking and consumer-directed finance.  We all know the regulatory track has been delayed with COVID-19 but there is important progress being made by industry lead organizations.

5. Who is your fintech/ tech hero and why?

Eva Wong.  Borrowell was one of the first major Canadian players to really see the potential of a data driven approach and invest in data science.   I’m continuously surprised and impressed by how they leverage alternative data in their new products and finally also their involvement with groups like the Canadian Lenders Association who promote ethical lending practices.   

Learn more here about the VoPay + Inverite partnership.

We’ve teamed up with top financial data providers to deliver our industry leading open banking payments solution that allows you to accept instant bank account verification payments, improve payment speed and reduce NSFs.

Let’s have a closer look at each of our data integration partners who are a part of the VoPay API that’s designed to optimize EFT payment processing:

Plaid

Plaid is focused on democratizing financial services through technology. They provide developers with the tools they need to create easy and accessible experiences for their users. Today, tens of millions of people in North America (and counting) have successfully connected their accounts to apps they love using Plaid.

Learn more about the VoPay + Plaid integration here.

Flinks

Flinks empowers businesses to connect their users with financial services they want. Trusted by hundreds of world-class companies, Flinks enables businesses to connect users’ bank accounts, enrich their data, and utilize it to deliver better products. An award-winning company, Flinks has become the leader in financial data connectivity in just three years.

Learn more about the VoPay + Flinks integration here.

Inverite

With support for over 285 Canadian financial institutions Inverite is the data provider of choice for many of Canada’s leading companies offering innovative, secure and cost-effective banking verification solutions to the financial services industry for income verification, credit decisioning, fraud reduction, and KYC/AML purposes.

Learn more about the Vopay + Inverite integration here.

More to come

We’ll be adding additional partners in the future so keep an eye out on our newsroom for announcements!

EFT payments are not created equally thanks to our mission of digitizing online bank account payments with speed, transparency and traceability. In our latest infographic, we compare our ‘smart’ EFT payments solution to our standard EFT payments service and to the traditional bank offering. If you’re interested in learning more just head over to our product page.

We’ve teamed up with Plaid to help make payment processing faster, more efficient and more secure. Before we dive into how it all works let’s get to know each of them a bit better.

Meet VoPay

VoPay is a leader in payment innovation, digitizing direct bank payments with speed and transparency. The VoPay Platform enhances how digital platforms initiate and accept financial transactions using a single, open API.

Meet Plaid

Plaid is a technology platform and data network that enables applications to connect with users’ financial accounts. They focus on lowering the barriers to entry in financial services by making it easier and safer to use financial data. Today, they support developers across North America and Europe.

How VoPay + Plaid Payments Work

VoPay layers Plaid’s Auth, Identity, Balance, and Transactions solutions over top of its core payment engine to deliver the most powerful EFT payments solution in the market.  The result is a seamless payment experience with reduced NSFs, verified bank accounts and improved payment speed.

Current Payment Challenges

There are three main hurdles when it comes to existing EFT payments:

1. Lack of visibility: Paper checks or electronic payment systems for bank account payments do not allow visibility into the bank account at the time of the payment.

2. No traceability: Businesses accepting check or electronic payments can not track the payments, the status of the transaction or when the funds will be available.

3. High risk: The current paper check and electronic payment service do not offer balance verification at the time of transaction.

Common Payment Use Cases

Some of the most common use cases include lending and market places where the solution can dramatically reduce NSFs, optimize cash flow, streamline back-office operations and improve payment security. Another would be legal and real estate where you can increase revenue with significantly reduced fees and decreased chargeback risk.

In summary, together VoPay + Plaid payments improve efficiency by verifying user identity and bank information prior to processing the transaction, minimize NSF fees by having visibility into available funds and reduce the access to funds time to just 24 hours.

Are you a developer? View more details here.