Interview with Form3 on Open Banking, instant payments, and changing the traditional retail banking model

Tuesday 22 October 2019 08:44 CET | Editor: Mirela Ciobanu | Interview

Open Banking Report 2019 The Paypers has sat with Jolanda Schekermans from Form3 to delve into topics such as Open Banking, instant payments, and changing the traditional retail banking modelOpen Banking Report 2019


Form3 is a cloud technology provider of Payments-as-a-Service processing for banks and regulated fintechs. What are some of the main ways in which you help banks and fintechs provide instant payments to their customer-base? 

Form3 enables regulated financial institutions, banks, fintech, ecommerce gateways, and card providers alike, to access payment schemes and real-time transaction processing through a single API, quickly, in a cost effective, and hassle-free manner. It is the same API whether you connect to FPS or SEPA Instant and more real-time schemes in the future. When you shield customers from the complexity of different integrations, market practice and standards, they can quickly deploy new services to market, at a low cost.  

Through our service, customers no longer need to be concerned who the network provider is, what protocol to use or what version of messages counterparties are on. We are completely agnostic. By using container based microservices, we can build smart functionality and deploy it instantly. An example is our intelligent router that automatically selects the payment pathway to use based on certain parameters to ensure the quickest route to its destination. This gives our customers full reachability in a market. As a fully managed service, we have full visibility of our platform performance. If payments fail or an incident occurs that is not automatically caught and fixed by the platform, we enable our customers to understand what happened, lowering the burden of exception handling. 

In 2018, Form3 entered multiple partnerships with fintechs (LHV, BPC, Ebury, to name a few). How are the opportunities offered by PSD2 complementing your faster payments goals?  

Offering customers the opportunity to build services that answer the need for speed to market while remaining a safe and reliable payments solution is crucial. We aim to deliver this through technology that utilises data to give immediate reconciliation to the customer. Opportunities like our collaboration with Ebury to build the first API-based global transaction platform for UK SMEs would not have been possible without the change in the market that PSD2 has provided. Together we enable financial providers to offer services that traditionally only global institutions have been able to offer to corporate customers. It is a model case of how collaboration can benefit technical service providers, regulated financial institutions, and credit institutions. 

What are the advantages that PSD2 brings to Form3’s clients and partners? 

The Bank of England has had the foresight to allow regulated financial institutions like Ebury onto the system as direct participants, which is not the case in other regions. By doing so it allows new players and innovators to truly participate in the financial community. PSD2 has opened up the market, accelerating the democratisation of the payments landscape that enables deeper collaboration. I can’t stress enough how important it is for banks and central infrastructures to open up and be ready for change, in order to reach their full potential. 

All this serves a common goal of reducing cost and supporting financial services to become more inclusive. 

What are some of the most important challenges you see unravelling now that PSD2 is in effect and what do you envision as the most important solutions? 

One of the main challenges is the different level of readiness in the market and the different effective deadlines set; the APIs provided are not always up to scratch, this will significantly impact what could be achieved with PSD2. The parties that want to make full use of PSD2 are accustomed to agility and a high level of service and so are their customers. On the other hand, merchants are also not all quite ready.  

National authorities that extend deadlines should also oversee that the collaboration between stakeholders is done effectively and set a clear timeline for everyone in their market to be ready.  

As a non-regulated party ourselves we still are very conscious of risks. Among other things, we are ISO 27001 certified, achieved the ISAE 3000 Assurance Report, and run a 24/7 security operations centre. We guarantee that the services we provide are in line with the scheme specifications and are working to build out further data services for our customers that will assist them in meeting their regulatory needs. 

Looking forward, how do you see Open Banking evolving into the banking and fintech industry? What are the benefits you see coming from Open Banking in the coming years? 

Banking will undergo further significant change. Regulators across the globe are pushing for open API which is a trend I see continue. Because of transparency offered especially by new(er) providers to the payments industry, both consumers and corporate customers will be more educated on payments than before and will want to take more control of their banking. Super apps are a clear sign of that creating a further demand on banks in order to win the customer relationship. 

When the instant market grows further, there will be demand not just for the transaction but also for more data and different data services. The combination of cloud native microservices based architecture in combination with API technology is going to be key to cater for all this in the real-time payments market. 

This in itself will enforce collaboration between banks and fintech, removing the perception of fintech as mere niche players or competitors, but instead as important allies.  

I also think the discussion in the market will change the view on financial standards and use, for example ISO20022 to be perceived as it was truly meant to be. When people talk to me about ISO 20022, they usually refer to the messages and like-for-like translations. The real ISO 20022 standard and its strength is the framework. Using common financial processes, no matter what the underlying service is, provides the kind of interoperability that adds to the strength of our API. 

About Jolanda Schekermans

Jolanda Schekermans is a Senior Product Manager for European Services at Form3, transforming the market with new and better solutions for old problems in Payments. Before joining Form3 Jolanda has earned her stripes working in the financial industry for 25+ years, at banks both in back and front-office and at Swift as a standardiser and consultant for payment platform and standards migration projects. 

About Form3 

Founded in 2016, Form3 is creating better experiences for customers and their users when moving money globally. Their mission is to leverage technology to lower barriers and open up clearing and settlement scheme access to financial communities in order to move money in real-time.

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Keywords: Open Banking, instant payments, traditional retail banking, fintech, cloud, Form3
Countries: Europe

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