There’s no doubting or missing the rise and rise of the FinTech sector.
In August last year Financial News reported on the massive funding rounds of ‘challenger banks’ like Monzo, raising over £200m, with £ hundreds of millions more planned. Starling Bank has taken in rounds of £30m and £75m; Revolut is planning an additional £390m on top of $800m thus far.
It’s reached a scale now where FinTech startups are the ones buying banks.
Speaking at the Wired conference the Revolut CMO Chad West talks through this massive wave of disruption, who describes it as the inevitable consequence of traditional banks having failed to make their offering open and transparent to customers, and failing to give them control over their money.
Open Banking – Scotland’s Global Opportunity
So what does this mean for Scotland?
Then there is the startup opportunity. At the heart of the growth is the trend of ‘Open Banking’ – New digital apps are leveraging the ability to better interoperate and share data to better empower customers with new features that they value. For example Lloyds announced they are the first to utilize it for credit card and savings apps.
As the Scotsman writes the race is on for Open Banking, and there is a unique opportunity for Scotland’s Fintech innovators to lead it, a viewpoint written by one of the local pioneers Money Dashboard.
The country has a deep history and presence in banking, and a highly innovative tech sector – The intersection of the two offers a hyper-accelerating opportunity for Scotland’s economy.
FinTech Scotland leads the industry charge, recently being awarded with European cluster status, a formal recognition for its excellence by the European Secretariat for Cluster Analysis (ESCA), which benchmarks economic clusters across Europe. As they report, the number of SMEs in the sector has grown by 60%.
What is Open Banking?
So whether it be launching your own FinTech startup or getting a job with one of the banks, the core technology skill at hand is API development.
The term refers as you might expect, to the use of open standards within the banking sector, to encourage and enable better interoperability between the banks, to achieve more integrated consumer services.
Banking Technology explains What You Need to Know, and Michael Gardner provides this excellent overview, highlighting the challenges and opportunities the trend will present, how banks will need to master better UI strategies and the use of APIs. The Open Bank Project lists a plethora of exciting startups pioneering different niches it exposes.
The enabling catalyst is open standards. The Open Banking Implementation Entity was created by the UK’s Competition and Markets Authority to create software standards and industry guidelines that drive competition and innovation in UK retail banking, and they publish the central standards for making possible the API integrations.
Research from The Financial Brand shows just how important and impactful the trend will be for the banking sector:
In this documentary experts including Kevin Hanley of the RBS explain how they’ve shifted from ‘point to point’ integrations between business systems, to APIs because these are more efficient and critically, enable the open ecosystems that stimulate creative innovations that power new products that customers value.
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Sharing of data between banks will encourage smarter services, better informing consumers about more competitive offerings.
Money Dashboard offers an exemplar of the new integrated services it makes possible, providing an app that enables consumers to make informed financial decisions, such as planning to reduce their debt or book a holiday.
Similarly Edinburgh-based The ID Co. is another startup pioneering this type of innovation. Their DirectID Bank Data Suite offers a hosted solution to very easily access customer bank data via a widget, automatically having their transaction data categorised and instantly viewing insights into their finances.
So what’s it like to work at a leading Open Banking pioneer?
In their video Money Dashboard provide a short overview of their pioneering history that has seen them lead at the forefront the evolution of the Open Banking industry.
They attribute their success to their company culture of valuing team players, of empowering individuals to make decisions and move fast to grow the success of the business, while also cultivating an environment where there is an ethos of caring for your team mates.
Money Dashboard has a powerful vision of democratizing finance such that they help their customers build their financial resilience and knowledge.
The Bank of the Future: An Ecosystem of Services
This examines the overall trend of “Platform Banking”, how the industry is adopting the Platform business model pioneered by the likes of Uber and Airbnb, what Cap Gemini describe an Ecosystem of Services.
A packed industry guide for the Open Banking trend and the global opportunity it presents for Scottish enterprise and startup innovators, covering:
- Digital Ecosystem Banking: The evolution to the Platform business model for digital banking.
- Case studies: In-depth analysis of leading Open Banking pioneers including Starling Bank, JP Morgan, Lloyds and Nordea.
- Industry player strategies – How Mastercard is setting out to dominate the massive payments sector.
- Technology disruptors and blueprints – Case study documentation of how HSBC employed ‘Cloud Native’ practices to build a mobile social payment app, and how trends like ‘Self-Sovereign Identity’ and Biometric payment cards will further accelerate the role of disruptive technologies.
- Vendor profiles – Analysis of major vendor offerings and the capabilities they make possible, such as Token.io and their platform for enabling an evolution to API-Based Banking.