Episode 5: Accelerating FinTech Innovation through Open APIs
9 June 2021
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In the fifth webinar by FinTech Egypt Dialogue, Open Banking
and its importance during the ongoing pandemic was the topic of interest this
time, with Mirna Sleiman, Founder of FinTech Galaxy, acting as the moderator
for the podcast’s esteemed guests: Akram Abdou, Founder of Egypt-based Underlie
Startup, and Mehdi Tazi, Vice President of Saudi-based Lean Technologies.
The conversation kicked off with Mirna giving a brief
introduction on what Open Banking and Open APIs mean in the FinTech world,
using a good analogy that the most important Chief Digital Officer today is
actually COVID-19, due to it forcing the world of finance to direct its efforts
towards digital enablers, open API connectivity, and similar approaches. Open
banking is the secure way of giving providers like banks and financial
institutions access to people’s financial information, achieved by giving
customers the ownership of their own information as opposed to FIs handling
them in a pre-COVID-19 era.
So how has the ongoing pandemic affected this shift in the
financial market? It’s obvious by now that customers are at the center of the
whole banking experience, and offering them a seamless digital journey has now
become the core of modern banking because they are the primary drivers of open
banking as a concept. Add to that the increasing pace of regulatory authorities
to keep up with FinTech as an industry, as well as the thriving technological
developments in many innovative areas such as artificial intelligence, machine
learning, KYC technologies and much more, and you get a ripe ecosystem for open
banking to fully grow its potential.
Many real-world use-cases exist for Open Banking, and Mirna went
on to explain five of them during the webinar. She started off with talking
about Account Aggregation, the practice of offering customers the option to
consolidate all their financial information on one platform for their
convenience. Personal finance management tools are also important today so that
third-party providers can provide customers with easy-to-use and fast tools to
manage their finances, including but not limited to investments, automated
savings, and product switching. Seamless payments is also an important cornerstone
of Open Banking, allowing simple and direct account-to-account transfers. Product
comparison and lending & credit risk are also critical aspects of Open
Banking, where financial data offers the required insights to make an informed
decision and therefore minimize risk.
The conversation moved on to Akram Abdou when he was asked
about the standards that govern the Open Banking API scene, and the importance
of having a global framework for standards in Open Banking today. Akram
introduced Underlie as vertical-centric startup that has been focusing on the
Egyptian market since it launched about a year ago, offering tailored products
to Egyptian consumers. Underlie took a top-down approach and started talking
with regulators followed by FinTech companies, banks and other FIs to try and
understand their needs and pain points, as well as what gaps exist and how they
can be filled using the customized products and services offered by the young
startup. They have had good success so far in understanding the FIs’
infrastructures and providing them with new proposed revenue streams that can
benefit these institutions, said Akram.
He said that Egypt having a total of 39 banks nationwide
presents an opportunity for fast-tracking the implementation of Open API
standards, and he feels optimistic about the willingness of FIs to implement
such standards to get them potential revenue streams. Akram also said that
FinTech companies also need to go through a rigorous compliance checklist in
order to determine just how exactly consumer data will be shared, among other
things, so that the consumer-centric model is clear and transparent to
customers that are willingly authorizing their data to be used for whatever
purpose.
Mehdi then took other to introduce Lean Technologies, which
he said I similar to Underlie in the sense that they also aim to bridge
existing gaps between FIs and FinTech companies, and also aim to provide a
universal API that lowers entry barriers for developers to venture into FinTech
products & services. Mehdi stated
that this is one of the standout differences between Lean Technologies and
Underlie because they are taking a more horizontal, pan-regional approach by
creating this global API for any interested entity to use.
Mirna then proceeded to ask Mehdi about how Open Banking can
transform finance as we know it, to which he replied that Open Banking is
already in the process of taking over the finance scene, referring to the FinTech
market in the United States that already has a bigger market cap than incumbent
banks currently. He elaborated on what APIs mean by taking himself as an
example; as the owner of 3 bank accounts in 3 different countries, Mehdi
previously needed to keep an Excel sheet with all his financial data to have it
all in one place. Today with Open APIs, he can easily use a third-party
application, much like Lean Technologies does, to connect all his accounts and consolidate
all his data in one mobile app that he can access at anytime and anywhere.
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