Fintech gets fiery: panel discussion on open banking heats up

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It was always going to be interesting – getting banks and fintechs in the same room to talk about open banking and its future in NZ – and our panel event didn’t disappoint.

Kicking things off was Edward Berks, Director of Fintech and Xero Ecosystem in the UK, who talked about the UK open banking scene. Edward spoke of the post GFC environment where banks were occupied by ring fencing and regulations which had resulted in an absence of investment and innovation in small business banking. This, he said, had been filled by Fintechs.

Digital banks, the likes of Revolut and Monzo, were changing expectations around on-boarding. Many of these companies were born mobile first and could bring on new customers within minutes. This in turn has forced banks to think about how they remain relevant.

Edward noted that use cases for open banking tended to start in the retail space but had now started to expand in response to broader business needs. Some of the areas it was working hard to address included bank feeds, getting paid and paying people and what he identified as the biggest opportunity with open banking – lending/cash flow management and access to capital.

According to Edward, banks in the UK are not necessarily able to deliver effective lending solutions for small businesses as the speed they operate at are too slow. In most cases the time between applying for a loan and receiving the funds could be six to eight weeks – a lifetime in the small business world. This is something he recognises as a challenge in New Zealand as well.

Then as the entree plates were cleared away and the main course served we turned to our panel for some extra insight. The panel comprised of Rhiannon White from Westpac, Will Mahon-Heap from Revolut, Ben Murphy from Spotcap, Edward and myself.

We started out discussing the new wave banking order that neo-banks like Revolut are driving with Will calling for more regulatory support to assist with fintechs starting up in NZ. He questioned New Zealand’s advancement in this space, believing that as a country we are still a way behind the rest of the world when it comes to open banking. Ben also agreed, referencing in particular the kiwi ecosystem as needing to play catch up.

On the counter, Rhiannon spoke about the availability of Westpac’s API services and called out an interesting distinction around disruption – that it is not specifically technology, but instead disruption is usually when someone solves pain points your customers are facing. She then went on to talk about how customer safety and security was the most important aspect for the bank and they had found that partnering allowed them to innovate while focusing on that initial safe and secure element.

Rhiannon also bought up an interesting point around who looks after the customer when something goes wrong. At present, banks in NZ will protect their customers with zero-liability clauses and the like, but what happens in an open banking scenario? Will was quick to comment using Revolut as an example and referencing the way the company deals with customer complaints and issues.

Questions around partnerships (not limited to banks and fintechs alone) bought on another passionate discussion between the group. Ben in particular spoke to the benefit that partnering with Xero had provided Spotcap and the edge it provided them over the competition.

Moving to later in the piece and an audience question divided the group yet again – will the open banking space be led by the industry or regulators? Rhiannon thought there was room for both, noting that Westpac was already making inroads into this space with its API services. However, Will and Ben weren’t sold – believing that until the industry was regulated, it wouldn’t move in the direction or at the speed required.

All in all an enthusiastic discussion with a number of different viewpoints. Regardless of where you sit on though one thing was clear = the open banking train is coming and if you want to stay relevant, you need to get on board.

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