When sea change comes to payments, some ride the waves, others get queasy – and still others reach for life preservers.
Open banking looms in many corners of the world, mandated in some areas (think PSD2) while driven by market forces in others (here in the United States).
Last week, the Canadian Bankers Association said in a release that the government should evaluate open banking a bit more carefully before fully committing to the concept. Risks abound, said the Association, with boosted third-party access exposing consumers to new security threats, and perhaps even threatening the economy as a whole. Those risks would harm its reputation and even hamper market participants from “manag[ing] their legal obligations.”
In the latest Topic TBD, Karen Webster spoke with Debbie Gamble, vice president of digital products and platforms at Canada’s domestic debit scheme, Interac, about the regulatory and commercial landscapes that surround open access in Canada and beyond.
While the overarching framework is one that empowers the account holder to decide how to share their data, Gamble said that last week’s statement via the CBA serves to “suggest that we have a managed open playing field … I would characterize it that [the] CBA is welcoming the open banking capabilities” – even while the press may trumpet headlines about risk warnings.
This goal to open up access between stakeholders as far-flung as consumers, banks and FinTech is easier said than done, Gamble and Webster agreed. Gamble said that over the past few years, Interac – as a network provider and a gateway between financial institutions, consumers and markets – has moved to embrace access through the lens of open APIs. The non-profit interbank network’s e-transfer third-party API, Intera said, has allowed for streamlined money movement through digital means.
“Data is at the center of this conversation” between her firm, its stakeholders, and the government, she said.
Where regulatory efforts have come to bear in certain markets – most notably PSD2, which is a directive extended across the European Union – Gamble stressed a more interactive approach, one fostered on collaboration. “This is something that [we in the Canadian banking industry] wear as a badge of honor,” she said of a constructive, collaborative approach to change. She held up sandboxes as one example, as the Canadian Securities Administrators (CSA) organization has helped FinTechs (examined case by case) bring new services onto the concept stage and into the real world with speed (and notably, without having to jump through all the required regulatory hoops).
Any entity in financial services needs to have a perspective on APIs, she said, and must “ensure that you have the capability to connect, interact and share information.” Consumers are gravitating toward a digital experience as they transact via mobile devices, third parties or in-app activities.
“Sitting on the sidelines is not an option,” Gamble cautioned.
The CBA input from last week also calls for changes in Canada’s Bank Act, focusing on the way banks interact with FinTech. One key point at issue: The CBA wants rules eased a bit that govern bank investments in FinTech startups. Access to capital, said Gamble, is a discussion that “absolutely needs to happen.” Such capital injections boost relationship ties between banks and FinTechs, allowing for easier pathways to distribution and scaling of innovative financial service offerings.
The consumer remains an integral part of the conversation, agreed Webster and Gamble. Consumers believe that the data that is linked to them is owned by them, too, and Gamble said the expectation is that banks will manage that data effectively, demonstrating the ability to allay fears over stolen identities and account breaches as needed. But customers must also be diligent in maintaining their data, which includes being aware of what fine print lies beyond the obligatory “I agree” buttons clicked at the moment of opt-in to services and data sharing.
What’s next for the ongoing dialogue in payments across the (Canadian) provinces? Fast forward a few years hence, and speed and flexibility will be continued topics getting collaborative treatment and consideration. “We are ready for conversation in industry around push payments,” said Gamble.