Open Banking insights from PIPC 2021
In September 2021, the Payments Association of South Africa (PASA) hosted its 4th international payments conference (PIPC). We knew that the discussions would be of significance to our clients and so we followed the sessions which covered the rapidly altering and transforming payments ecosystem, both locally and globally.
Below is our summary of the one of the panel discussions which we shared with our clients, many of whom did not have the time to attend. It also allowed us to better understand current industry thinking and so, when next we draft thought leadership media copy for our clients, we are fully informed and able to place their thoughts within the current discussion.
Open Banking – are we living the dream?
One of the sessions which stood out for us at the PIPC was the discussion around open banking. We know the initiative will affect the entire financial sector and could have a far ranging impact on consumers as well.
SA can learn from the experience of others
Open banking really hit the headlines, albeit mostly the tech and trade media headlines in the leadup to the EU enforcing the Second Payment Services Directive (PSD2). Among other requirements, this forced banks to open their systems to allow third party providers access to customers’ banking data.
The requirements were designed to drive more competition into a traditionally closed market, allowing the nimble and innovative fintechs access to valuable information that allows them to design and deliver new services that customers are snapping up.
A panel at the conference addressed this topic framed within the context of the modernisation journey of the local payment industry.
Slow going, but bearing fruit
Consultant Kevin Brown shared some of his experience in the open banking (or open finance as it is more correctly referred to now) journey in the UK.
One of his observations was that the requirement of getting disparate networks to work together to deliver services made the move a challenging and slow one. However, he shared that a good indicator of the advancement was that around 800 million API calls now take place every month.
Brown says the benefits of open banking are being seen in individual use cases as well as an overall perception from users. Efficiency gains, the seamless flow of data and services with improved value propositions have won favour with consumers. Work between banks and ERP companies to provide a more seamless service has also been welcomed by small businesses and their customers.
Local use cases to tackle socio-economic growth
Bishen Kumalo of BankservAfrica flagged that a key use case for open finance in South Africa would be to help fast track financial inclusion. Specifically in designing new ways to speed up the onboarding process in order to bring more citizens into the formal financial ecosystem.
Kumalo was also quick to point out that improved inter-network communication would pave the way for helping SA citizens digitally register for social grants and then receive digital payments, cutting down on days’ worth of manual bureaucratic requirements.
Nedbank’s Chipo Mushwana spent some time discussing the many benefits of the speed, innovation and transparency open finance would bring to the local market, saying that new, innovative services would serve as a business driver, particularly amongst our SMMEs.
Of course there are always concerns when it comes to any new standards or technologies and everyone on the panel was adamant that security should never be compromised in a rush to deliver on open banking goals.
In the South African context the panelists said the first step towards an open finance environment will be seen through faster payments. As we approach the go-live date of our own Rapid Payment Programme, they believe the need for seamless communication between banks is obvious.
Understanding complex industry issues
Semaphore works with a number of clients who are directly impacted by how our national payment system is regulated. Part of what we do is to work closely with clients to provide their insight and commentary to the market on how current and proposed regulations will impact both the industry as well as consumers.
We see this as a vital opportunity to influence public policy and regulations by contributing to the bigger industry conversation. This in turn can provide lawmakers with considered technical and commercial angles which they may not have otherwise considered – or indeed even been aware of.
