FinTech Scotland published the first Fintech research & Innovation Roadmap in the UK back in 2022 where Open Finance was highlighted as one of the four priorities for the UK.
In order to progress the Open Banking and Open Finance agenda in the UK, Stephen Ingledew, Chair of FinTech Scotland, joined the board of the Centre for Finance, Innovation, and Technology (CFIT), the organisation driving impactful change and shaping Open Finance developments across the UK. CFIT published its Open Finance Blueprint earlier this year.
One of the major advances has been around lending both for individuals and businesses. Banks have been lending money based on sometimes wrong, incomplete or out of date data for years. With Open Banking not only can they access real-time data, but they can also understand credit worthiness based on new models developed by innovative fintech firms.
For example, CFIT’s pilot with HSBC UK shows that data access improves lending decisions, potentially increasing financial support for SMEs. Insights into cash flow and transaction history give lenders the opportunity to move to faster and make more informed decisions. Scottish fintech Atto is a great example of fintech enabling better lending decisions.
Another great use case has been the development of tailored support around financial guidance. Scottish fintech InBest has developed a benefits calculator now used by companies such as NatWest, allowing people to access billions of unclaimed benefits.
Finally, Open Banking has revolutionised the convoluted world of payment. Companies like Modulr can streamline payment thanks to account-to-account payments powered by Open Banking, hence reducing costs.
It is fair to say that it varies. Ecommerce and digital service providers were early adopters, potentially benefiting from having more tech-savvy customers when traditional retailers and SMEs may still be cautious of integration costs and complexities.
At FinTech Scotland we believe that adoption will happen by providing both merchants and customers more and better use cases. Educating is hard, but showcasing benefits and making people’s life easier, friction-free, and more cost-effective might drive faster change.
We need to focus on the benefits, not the technology.
The next wave of Open Banking adoption can be linked to the development of embedded payments in sectors such retail, utilities, and travel. These industries are looking to streamline payments, reduce transaction costs and widen revenue streams. Retailers, for instance, can enhance customer experience by offering direct payment options, while utility companies can simplify recurring payments.
On paper, Open Banking can address traditional cross-border payment challenges for B2B transactions as it enables real-time transactions, direct account-to-account transfers, reduce fees and better payment tracking.
However, it is still early days and whilst most countries are developing their own Open Banking framework it is crucial that standards are put in place and implemented around the globe to enable innovation and the development of new fintech solutions to create better outcomes for all around the world.
About Mickael Paris
Mickael Paris is Marketing Director at FinTech Scotland and one of its two co-founders. With a strong background in fintech strategy and innovation, Mickael has been driving initiatives that encourage collaboration, knowledge sharing and innovation within the fintech community. He plays a key role in bridging the gap between fintech enterprises and established financial institutions, enabling growth and sustainability in the sector. His expertise spans digital transformation, Open Finance, and the development of supportive infrastructure for the fintech industry. Mickael has worked for both startups and FTSE100 companies including Maxymiser, Skyscanner and Standard Life. As a marketer he was featured in the BIMA100 list of marketing influencers as well as the Marketing Magazine NextGen Power 100.
About FinTech Scotland
FinTech Scotland is an independent not for profit cluster body jointly established with the financial services sector, universities and Scottish Enterprise to ensure that Scotland seizes the fintech opportunities and achieves positive economic and social outcomes by encouraging financial innovation, collaboration and inclusion as part of the broader digital economy objectives.
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