Open banking

Which is also a bit of a problem for you and me because then the honest borrowers end up competing against the fraudulent ones.

Josh Daniel is the co-founder of Akahu, which runs open banking infrastructure used by our main banks.

And he is on the front lines of how the financial industry is fighting back.

Historically, it's been pretty hard to generate a fake file, but with AI, you can get a professional-looking file without having the technical skills to make everything else appear as an original document does.

So what the FMA is talking about is expectations around what you can do to try and prevent this type of fraud.

There are things you can do to try and check whether the documents that are being shared, the evidence that's being shared is genuine or not, but it's pretty hard to catch all the cases.

So the better approach, and this is where open banking comes in, is that the applicant agrees to share data from their bank and then the lender fetches that data that's been consented to from the source.

So there's no chance for uploaded files that may be tampered with.

That was, yeah, over 10 years ago.

And to kind of dive into the evolution of digital finance, open banking, intelligent finance, Brian, walk us through open banking to open finance, what you're calling intelligent finance now as a business.

How did we get here and how fast moving is this space right now?

Yeah, absolutely.

And I think you articulated it quite well.

There's been a journey through that period of this industry more broadly and sort of what our focus is.

It started really at the beginning with what we all sort of called open banking, right? Which was this very specific thing of users sharing their banking information to other parties and doing so in a secure and permissioned manner.

That's where it all started.

Quite impressive.

And I think the right person to ask all my questions on the current and future state of open banking and embedded finance.

So thanks a lot for making some time available for me.

Pleasure, Nick.

Maybe the first question, a very general one.

We're now 10 years past PSD2 and probably also almost 10 years that we have been discussing PSD2 and open banking.

Looking at the topic today, do you consider it a success? Well, of course,

that depends on the definition.

Yeah, that's a good point.

Obviously, open banking can sort of help with those variable recurring payments that you mentioned.

But obviously, I don't think maybe open banking was initially designed with AI agents in mind and identity payments in mind.

They kind of operate in separate fields.

You know, one consent, agreed limits, sort of no re-authentication each time.

That is a great question, and we spend a lot of time thinking about things like that.

The first one that comes to mind is the use of open banking technologies or processes as the way to provision the routing and account information that is used in making ACH payments.

Younger generations of consumers show increasing levels of comfort and willingness to link their bank accounts online to services to make and receive payments.

In fact, NACHA just completed some new consumer research, which finds that approximately 89% of consumers aged 34 and under are comfortable linking their bank accounts to services, wallets, and apps.

And that's a fairly sizable difference than with older generations of consumers.

who many still use checks, but also many use ACH, but will get the information to use ACH off their checks or from their checkbooks, whereas the younger set of consumers may not even have a checkbook on which to refer to for that information.

So linking accounts through open banking, I think, is a change that is already happening, but will be the predominant way in the future in which consumers will enroll for and provide account information by which to make payments.

I think the second one I thought of, I think is a bit speculative, but I think that ACH is going to be a common method to move U.S. dollars into and out of stablecoin and token exchange networks.

I'm Rory Bathgate, associate editor at FS Tech.

Open banking is already rising in adoption and delivering value to the UK.

The Financial Conduct Authority measured a fifty-three percent increase in open banking payments across twenty twenty-five, and Open Banking Limited found that open banking reached six point five million user connections throughout the year.

The organization also noted that open banking has already delivered eight point three billion pounds in benefits to the UK economy, and in the long term could deliver up to forty-three billion pounds per year.

Today, I'm joined by Lee McNab, group payments lead at NatWest, to discuss how open banking is already transforming the payments industry and what's on the horizon for organizations that have already embraced the standard.

Lee, welcome to the show.

Cool.

So there's definitely an element of, "Well, I can do this completely instantly.

But one could argue that your first two points, the sovereignty point and the universal acceptance, could have been done differently.

The regulator could have mandated open banking, for example.

That would also have given sovereignty and universal acceptance if they mandated that.

instead of inventing a new state-driven thing.

Let's stop whinging that we lost the battle to prevent the digital euro and let's make the best out of it.

I think that is really the right approach.

If I'd been emperor of Europe, I would have mandated ideal everywhere or open banking everywhere.

I wouldn't have gone for the digital euro, but that has happened and let's make the best out of it.

Welcome everyone.

Welcome Jasper, Head of Product Open Banking at Rabobank.

Perhaps as a first question for our audience, could you briefly explain how long have you been involved in the open banking space before we dig deeper into your vision on the future of open banking?

Yeah, that's an interesting question.

I work at Raobach now for two years.

So that might give some relevant perspective.

But

definitely with an open mindset towards open banking.