#36 Open banking – full transcript of the podcast

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Helene Panzarino: [00:00:00] Welcome to another episode of Vacuumlabs Banking on air. I’m your host Helene Panzarino and today I’m joined by Simon Lyons,  the head of Ecosystem at Open Banking, and we’re going to delve into all things open banking. If you’re with us for the first time welcome. If you are a regular subscriber, lovely to have you back, and please share with your friends, share with your colleagues. We’d love to have your audiance. Simon welcome to Banking on air. It’s lovely to have you with us.

Simon Lyons: [00:00:30] It’s lovely to be here, Helene. Thank you very much for the invite. Look forward to talking. It should be.

Helene Panzarino: [00:00:34] Simon. Thank you. I think it will be because actually I really wanted to talk to you again because we met on an another format and other online virtual format and I was super impressed and very much thinking, gosh, this guy really is getting to the nub of the problem and not dancing around things. So for me and for our subscribers, I really want to get to what’s going on. I still think there’s some confusion around what open banking is, what it was meant to be? Where is it going to go? Lots of things. I think there was a misconception in the UK that it was going to be all bells, whistles, fireworks, and overnight everything was going to change. So it’d be good just to unpack that and to see with you what you take take on it, get your thoughts on it, get your view on it. And see where we might be going with it as well. Before we get into that, let’s find a little bit more about you. So the role that you have now, and maybe how you got there.

Simon Lyons: [00:01:25] Well, thank you. I’m a very, very lucky man. I managed to get a job called Head of Ecosystem Engagement and gave me two really distinct roles in open banking. The first one was to grow the ecosystem commercially. So banks that join open banking can be TPPs to bring them in just to make sure that that FCA accreditation and membership of open banking was joined together. So we had a club basically, where trusted members could join us and could get the benefits open banking, and so that we could help them in some way and help them be a point of reference and the appoint of accreditation. It’s very, very important to understand that all these businesses in open banking are FCA accredited. They are all nationally competent. They can all say, well, we’ve gone through a certain. The second half of the role was the fun, but I get to engage with industry. So I get to talk to different parts of industry to try to extol the benefits of open banking. If you understand my past, you might understand why my dialogue maybe is slightly different than others. I spent a great deal of my career in a bank called the  ????Bank. And in there, what I used to run was all the digital engagement with corporates, but it wasn’t a technical job. It was all about getting data to them, getting payments to them, being efficient, stopping paper, and getting people to work with the bank and as efficient way as we possibly could. That lens spread across two SMEs working in vulnerable adult banking. I’m looking to have launched with some of my colleagues, the first appointee ship and deputy ship account with local authorities in the late nineties. I’m that old, I’ve got extensive experience across agency clearing and across local authority banking. All those come from one thing, which is a real understanding of high volume banking. That really is where I saw a great deal of benefits. There’s one statement I think is really important. No one person knows all the benefits of open banking. No one. Because we’ve got 5.9 million SMEs in this country. We’ve got they account for 50% of the employment. They all do different things and they all have different banking relationships. They all use different products. So for any one person to say, I know the answer to everything, arogants the right word. It’s far too much of a sweeping statement. It doesn’t provide enough credibility. My view was that there is enormous benefits for open banking within corporates that have high volume populations within government, within people that suffer from some of the legacy problems of bankings over the years. There’s not a great deal of innovation in banking. I think the last big one was the ATM in 1968. But I want to position what open banking is in probably a dialogue the others wouldn’t use. For many, many years banks have told us how todeal with them.. They have said, if you’re going to deal with a bank, you’re going to go to my brunch. You’re going to ring my telephone number. You’re going to use my digital channel and you’re gonna use my paperwork. Well, that’s alts with most of their industries in our .com years. Where we could access last minute.com. We could aggregate data from third providers. We could do things. What open banking did and it’s driven by standards. And this is something I think that it is open banking  greatest strength is that we said, well, now you can engage with your bank how you want, you don’t have to use the bank channel. You don’t have to use the telephone line. Is somethings, you still have to do via that way. You don’t have to access it that way. So what it meant was that for big corporates, for TPPs that deliver solutions for fintechs that wants to build something out differently, you can get the bank you want, not the one you were given. Banking has been aggregated and that’s an enormous statement and probably one you don’t hear very often.

Helene Panzarino: [00:04:39] It’s very interesting. And there’s a lot in that as well, because of course, I was going to ask you what is open banking and for the general public’s understanding if they’re not actually involved in it, either as a bank or as an SME, but you flagged the word standards as well. And when this first launched there was some question around the first nine banks and we’ll roll back to the CMA nine. The standards around the APIs, the tech standards not being uniform. Was that done intentionally? Was that just the way for the banks to not engage? Clearly the banks are sitting on data, which is a the crown jewels for them and they didn’t want to get involved. So I want to go back to standards versus laws or regulations as well, because I still think people don’t really grasp what it is. If we roll back to 2016, when the CMA decided that they wanted to look into the competition and markets, authorities wanted to look into competition in the landscape in the UK. I think around that time, by the time it got to around 2010, we’ve lost so many banks in the UK, literally probably a hundred banks or over a hundred by consolidation or closure that over 70% of the business accounts were sitting with probably six banks, which is of course was not a competitive situation. And we tried other things like bank referral scheme for lending and other things that just didn’t really hit the mark. And then that dreary afternoon in January, 2018, when open banking came onto the scene after PSD two obviously was I think seen by some, and I say this there’s some people that are always going to be slightly derogatory and they’re poking holes. They’re looking for holes. And they’re looking to say, yeah, what was that?  What is it, what did it achieve? I think people don’t who are doing this, don’t understand what it was. So if we take it back to, and we’ll come back to standards,  what that was, what was open banking meant to be when it launched?

Simon Lyons: [00:06:20] So open banking was part of the something I’m not an expert on this, but give me the CMA remedies that were launched there was a range of them. There was ones about digital account opening. There was,  one’s about being able to move your business account. There was the accompaniment of the pay UK product, which is cast Credit card switch service, which all set out to go and make a difference. I mean, increased competition is an easy way to go and take that and, you know, for people that want to read the order word for word verbatim, that they can go and do that. I think that what was need what you’ve got to bear in mind was, was that this has never happened before. So there’s a headline there that says increased competition. And what you’ve got to do is put a stake in the ground somewhere and start it. If I’m very, very complimentary for a moment, the value of standards is something that we should look at, which has allowed us to have a level playing field. And I’ll expand why, if you go both open banking, which is above 7 million turnover above the accounts in the same ,you get to corporate banking now in corporate banking, you’ve been able to use swift host to host, statement messaging, MC 1 or 2 9, 4, 3, 9, 4 twos, all those good things that come out. BAI 2 all those good things that come out. So corporates had these solutions. In simplicity what we did in this  is we brought that down a layer, and we said that what we’re going to do is going to create it. But instead of it being a commercial standard where people want to use swift files, where swift charge for it, they go and do it. We should. No, no, no. This is the basis. This is the minimum point. And you have to set there as well and stuff to use the word minimum, which is incredibly important because if you set a point that everybody’s got to achieve and they can excel above that. Whereas when you leave a completely free market within banking  and then standards, you end up with 15 different standards. We don’t need to look very far to see what happens when you leave people to build their own, where people try to build out schemes on their own. Look at ACH in the states, look at some of the Australian payment schemes where they’ve been very much commercially led as well. The real value there is, is that we gave a start point. Is it the end point? No. The reason I say that as well as is that open banking gets compared to cards on a daily basis. It frustrates the hell out of me. Cards have been around for about 50 years. It’s a commercial protection scheme. They actually have close to ubiquity for access. The parity of the banking platforms that provide cards at CSUs is the first data is the yellow chilies, the large Italian platform there as well. They provide the same output so people can interface. And just look at that for a moment. Have a look at travel. And if you look at travel, you have something called a GDS global distribution system. I think it’s called a data system. You have an ability to winning cars where people can aggregate the data on a booking with the payment, but it’s not within the payment and they can transfer all this data and use it. If you want to see what standards builds out, you’ve simply got to look at the larger corporates and where you get. So what did open banking set out to do? Could anybody have said what the 10 year goal was? No I don’t think they could.Could they say what it would change and what it would create? Yes, they could. I think they could say that it would create options for people. It would give people the option and life is nothing without options. So examples of where you’ve done that anybody listening who is self-employed has probably sent their bank statements, their accounts, and they’ve probably sent a shoe box with receipts in it, and they probably waited for their accountants. Do their bookkeeping more than that now, because what you can do now is as you can transfer via open work’s just been pushed by tink. And then we’ve got the tink purchase by visa. So now people can share their bank statements with their accounts and easylly. We’re not innovating that we’re making something very efficient. We’re making it very practical. It works on a very practical level. Did open banking sets out to make sure that account statements will be efficient for accountants? No. Lending. If we have a look at the traditional model of lending of credit underwriting, we want a PNL we want a balance sheet, or what are all those businesses under two years old? So suddenly what we provided for open banking was the ability to look at the bank account. We provided that. By the net effect of creating efficiency and giving instant data in this case, the bank account data, we enabled industries to react quicker, module morgages, open banking, led morgages, and we’ll go that just digger. He’s got no trading history. It looks at his bank account. We look at vulnerable adults. We’ve got that. So could I tell you what they set their scene for? No, I couldn’t. They wanted to create competition that actually created a great deal of efficiency, a massive efficiency. And from that efficiency will come choice. As people use open banking, it becomes more mainstream. It’s not yet .  Today I spend a lot of my time talking to a C-suite and directors and senior people in corporates. And the first thing they say  is what’s open banking. So what we’ve created? We’ve created a catalyst for change. We set out to create competition, but that is an outcome. It’s not one of the steps on the way. The outcome is to create people to change and people to move up. Along this journey on the way now we’ve definitely given the solid foundation blocks. It was 813 million API calls last month. I think that’s pretty good. And those API calls are all call imbalanced data from accounts. Advent of government taken onboard insurance companies, wealth tech. You’ve got Siemens embedding quests to play within the pre-pay meters. We’ve got to look at what enables the outcome. The outcome is competition. The outcome has changed, but it’s the efficiencies that drive that they’re the ones the catalyst to make it move.

Helene Panzarino: [00:11:19] It’s very interesting because again, I come back, people would think that it was the competition, but actually when you speak about it, then it becomes more meaningful for me. And I’m already on board  as someone who thinks that it has a value for SMEs. I hadn’t really thought about that government let’s say during the pandemic, when everyone was trying to access information and share information for the stimulus packages, whatever they might be, whether they’re individuals or for businesses we saw there was everyone focused on digital identity, but we saw that there was something missing in the chain, which has then gone from the large banks, the alternative finance providers, to be able to get that information exchange using open banking and perhaps one of the silver linings of something so horrific is that people learned that this was an option and they learned how to use it. I also want to ask you about that because with SMEs I I’ve been beating the drum on funding for SMEs for quite a long time and I maintain that most business owners are not aware of the full spectrum of finances. So I’m always trying to add. What was there, or is there a lack of education for the community? Did people learn by features and benefits and should we have done more to get more people using it more quickly?

Simon Lyons: [00:12:28] You say features and benefits in the same sentence I think that two don’t live in the same room. Features are one thing, but features don’t necessarily mean a benefit. For me benefits is absolutely everything. It is the crooks. Now put it really simply. If you’re an SME, that’s just applied for lending with your bank, with a broker and you’ve been knocked back on another broker says, let me try for you. That  experience will say to you, well, why? Why did I get funding that? Now as someone with a long, long history and cashflow and the power of it as well, I’ve seen lending for VAT at 52%. Which I think is genius. But then again, I’ve also seen somebody with the same information, get lending at 11%. And the reason they did it was, it was because the information was easier to access. So,  I come back to this word all the time, easier efficiency. It really provides so much more to the SME that if they can upload their bank statements quicker, the underwriter can make a decision quicker on much more tangible information. A lot of the traditional underwriting and I don’t blame them because it’s an extremely high risk business is built around. Yeah. But we’ve given a new option. And the only reason the option is there is accessibility. We can now get people, their bank information much easier. So do the SMEs have a greater suite of options now? Yes, they do that. They absolutely do. I do agree with you with the challenge of education and getting it to them, but I think that’s where I come for me what is the most important point? How would SMEs learn about this? Would they learn by. Reading the government pamphlet? No, probably not because. They’re in the club, they’re in the small community and they have a mate of theirs that recommends a broker. I get asked every day, I want to get this one to get that. I’ve just been asked this morning, do I know a morgage broker? Obviously they use open banking and it’s that referral process we’ve got to get to that internal referral process. How do you do that? You do that by people having a positive experience and the message spreading it’s precedent. And that precedent is set by dealing with bodies that you trust. So if you look at Jack who bought a Digger that I know, well, he told about 10 of his friends, that this broker is using open banking. If you’ve not traded for two years and you’re not met the rest of the 900 and you know, there’s bits missing in the chain, they’ll do it. It might cost you a little bit more in interest. What you can get the digger because you need the digger to go make your living. I think it’s always scares me. When I hear people talking about SMEs and I don’t include you in this and about funding, they’re running a business as well. This should be easy. And the trust point, the recommendation is that I believe that what we’ve got to do is, and it doesn’t happen quickly. It’s a very much a bell curve. Look at the PayPal growth early two thousands. Look at when he gave away the $20, what people did with it.  It  the ballooned. We’ve got to get people so that their friends and family are talking about it and then it grows organically. It goes in. What it won’t do is it’s gotta be real to them,Banking is quite parochial. If you look at the hotspots of banking around the UK retail banking, isn’t it. You use any brand you want, but when you’re in SME  banking as well, sometimes you’ll go to quite specialist places that want to work with you.  Set of being a good example for draw down of loans. You’ll have, long bar, if you’re going to go and get a car black cause finance, same thing. People use certain industry specific offerings, and I believe federalization is the enemy. I’m a specialist, I specialize or die. You have to get people in a certain sector to understand it. So, a long answer to summarize, which is people learn by precedent and by referral and the one thing that needs to be in that precedent for is trust. And they get trust by working with bodies that they currently work with, who use a more efficient method or a friend says use my body. So I think there is some exciting things coming for SMEs

Helene Panzarino: [00:15:47] And in the UK and I’m sure this exists in other parts of the world as well. I know this the SBA, for example, the small business administration in the US. So we have at least four, that I can think of SME, kind of associations or organizations that lobby for our rights and offer certain discounted products and services, et cetera. And they’ve been around for a long time. And by joining them, I think we’re assuming that we trust them. Are they a good conduit?

Simon Lyons: [00:16:08] I think they, one of them. I used to bank the FSB when I was at the co-op. We used to go to Blackpool and see them up there and I think it was Vulcan house by the bottom of the runway at Blackwell airport. And they’ve got a certain voice book. The problem with people is, is that they all do different things. So I’m sure all of us have got family, friends that are self-employed. So I’ve got a brother-in-law that self-employed, he employs 68 people. He has absolutely no interest in any trade body whatsoever. But  the fundamental there is his audiences is his bank. And he’s incredibly frustrated with him at the moment. So he’s gone to talk to certain other banks where I’ve been saying to him, Banking’s pretty generic. The price changes a little bit from bank to bank, but the way you access it is crucial. So we’ve just done some bulk API work with him, for his guys wages on a Friday, he said it saved him 11 hours a week of processing individual payments of copying from a spreadsheet. They’re very, very light touch. Is there one audience that speaks to everybody? I think the only one is the HMRC. Whether people trust the HMRC or not, their communication channels are unbelievable, but it’s whether or not that message is,  the HMRC to give. I think there’s a really key point here as well. It’s not the bank’s fault. The banks have had to produce a service for SMEs, which is 50% of the client base to match all needs. So consequently, you get more generic channels and NSP.. I don’t blame them because the cost of change in a bank is astronomical. Open banking for banks, really, for me is people may well get a good banking service. If they can interface with that bank in the way they want. That’s really, really key. If the cash flow was visible to the bank and the bank could see it, and precession lending was available, which is something I would love to fix or get somewhere in there, then the fintechs can really play a role in this and really make some space. But I don’t think there’s one audience and I’m a firm believer that every human is different and we can put them into populations, but we have to speak to those individual populations.

Helene Panzarino: [00:17:54] And in that sense with making the relationship with the bank more of what I want it to be and having intelligent data that comes out of my transactions. Presumably if I’m using a FinTech to make peace with your payments or something along the lines where I’m getting time back in my life and I’m getting paid faster than someone else is getting paid faster. Using open banking, the bank that’s involved in that it takes a smaller margin, but sees me as a potentially stronger customer where they can offer me other products and services and the relationship between myself and the relationship manager, if I have one, or if I haven’t been bolted into a group somewhere should be better. The thing that keeps running in the back of my mind, and maybe this is something that I have to get over as someone who’s owned a few SMEs over time is, Am I, as the SME owner prepared to share all my information in an aggregated format and be totally upfront and honest about it. Whereas before there might be a little bit of backing and dive in, and as we said, sometimes you get declined, you don’t always ask the question. You’ve just go away and say, I’m going to go use a credit card or get money from friends and family. I don’t really delve because up to this point, everything was pretty good. Now you might go to an alternative provider. Is there also there’s the bank and then there’s me as the business owner, a need for me to change something in the way that I approach this? And is that something that is potentially generational and falls away with a younger entrepreneur? Or is it something that doesn’t matter?

Simon Lyons: [00:19:20] Well If we go back, I used to run a CPP that did a cashflow product, which I still think is the best one I’ve ever seen, but for certain reasons, it doesn’t get out of that. The failure of businesses is the same right now as it wasin 1910.If you can make it to two years, you’ve got a long way in here as well. They all fell for the same reason, cashflow. And if you look at a bank, a bank only provides historical data. They have to, they have to vote a complete record. The gap between the business and the bank is the business wants to run a business and believes in themselves. They have that risk profile to do it. The bank has to adhere to risk policies and has to go and do it. So how do you fix it? Well, anything that would give you a better view of the future would be good. I mean, I find categorization a very, very hot topic of discussion because I’m very interested in, it’s great to know that I’ve been to Marks and Spencer’s, and I went to Nando’s last Thursday and, but you know what, I’d much, rather than a one I can go.It will be a very, very powerful piece of information. And every single banker, if somebody asks for lending, they will want a cashflow. Every single time. So as you say, you’ve got the relationship between the stuff lending is reactive as a rule. Once again, it is not sweeping step for every population. If we could do something with the banks where the businesses can be monitored during their cycles and the bank can be better aware and better future-proofed, then the businesses will naturally benefit because the bank have got lower risk lender. Obviously the further out the lending is in front of you, the lower the risk. Because, you know what the event is going to be. If you want it tomorrow, you pay the price for it, supply and demand. Natural economics that it really works that way. Does it need to change behaviors? Do you know what I don’t think it does. I think all it does it makes a rich relationship between client and bank. Once again, we get back to, as you say, generic relationship management in banks. When you go above that 7 million turnover, I was talking to two of the CMA known last week to the public sector team charity team, central government team, proxy management seem high volume payments, renewables . And they’re all specialists because the customers are work a lot. Whereas in SMEs, it’s the bundle that’s working on money. So what we can actually do here is we can change the relationship between the SME and the bank simply by giving the bank a better view of their life. With regards to them, the risk process. If it’s in the bank, you’re going to pay tax on it. You know. What wasn’t it is outside of that? It’s not my concern. It doesn’t bother me at any point in the day as well. But if the business can see there’s a benefit for them being more transparent, maybe in lifestyle businesses and in businesses without good pro finance professionals, because you got to pay for them, then they can get that information easier. I don’t think that and forgive me I may well offend some of our banking partners.I would never mean to do that. I don’t think there’s that realization of just how powerful this information is, because if a bank could look at presanctional lending for a customer and offer it via fintech , You’ve got a big event coming up a week on Thursday. Do you want to fund this? Do you want to use your overdraft? Do you want to pay on a card? Do you want to use invoice discounts in ? What would basically looking at is supply chain finance for SMEs at the right time? And that’s normally a very, very, very expensive process. So again, all we do is we’re bringing that enterprise technology down to the SME level as well. I would love to see the day where a banking app says to a customer, not based on the credit score, not based on the historical information, but says, Hey, we notice you’ve got a capital purchase coming up and we would really like to help you fund it. It will be wonderful. And I don’t think we’re far away.

Helene Panzarino: [00:22:42] That’s for me is the joy in all of this as well, because I am a real huge proponent of cashflow forecasting. I can remember revolving credit lines when I was a banker myself and essentially .. A credit card becomes a revolving credit line. But in this instance, I also had a beauty business. Well, my journey and we were manufacturing a Shanghai, getting it over here, having to get it up to Liverpool two weeks before having a lot of stock tie it up, could never get a real time. valuation, never get pre-approved lines. Couldn’t factor the invoices because it was salary returned. Yet we were doing significant tens of thousands amount of product every hour of that journey. And that’s a huge business. I wasn’t alone in that. But there wasn’t that predictive ability. And again, like you say with banks, I love accountants, love you all, but you’re doing forensic. You’re not doing a forecast. By the time it’s happened it’s too late. So the predictive ability, the predictive analytics, the predictive forecasting, and I know we’ve had a crazy one and a half year, two years, behavior from before is difficult. But that’s the thing that you need to see. You need to see the forward. Not the necessarily what happened before. Although it’s valuable to a certain extent. So it’s, I mean,  we got this all started over here following one for PSD2 in Europe. And now I can see, as I look around the world, the US is having a conversation about moving open banking on from being just commercially or market-driven. I’m seeing it when I’m in the Middle-East, in LATAM, as we did with other things within the FCA, are we helping people to understand our journey and learn knowledge share? Are we involved in any of the things that are happening like maybe by a certain type of bridge that works with open banking as we have with other types of FinTech? Are we involved in that or are we just setting our stole out and watching other people watching.

Simon Lyons: [00:24:27] I’m going to buy that one back if you don’t mind The  problem is, is the consultation under the order? The answer is yes, but it’s not in the order and adult want to talk about things, not in the order of your mind. Okay. Let me give an answer. It’s a very, very interesting point as well.  Open banking is instructed under the order from the CMA. We operate within the constraints of that order and with the benefits of that order this with it. However, you know, there is an awful lot of interest in what we do. Is there a watching brief that people take on what we are? Is the first ?Of course there is?Is a different models emerging? I mean, I think you just refer to LATAM, the Brazilian model is quite fascinating.  The centralized hub of technology really is. Is  quite remarkable. I always think that we would go back to that standards point as well. And we set the first standards. The good people, Freddy Gower, wonderful man incredible. One of the most important people in open banking in my opinion. But what we’ve done is we’ve created a thought point and a great point of reflection and investigation. And I think what people are doing when they look at open banking in the UK and look at what we did, once again, they’re applying it to their own territories. In the Gulf states it’s very, very different. You  know that as well as I do. There are much bigger power brokers there than we have here in the UK. And I think what we’ve done is we’ve started the conversation about standards are incredible powerful, but how does it work for us? Canada, great example, that I know some of our members have spoken there as well and stuff, so yeah. The world is definitely asking lots of questions. There’s lots of international emails, I think is the best way to say it.

Helene Panzarino: [00:25:53] You mentioned Canada, cause I can remember being there maybe 2019 and everyone’s attitude was helping banking open shmanking. It wasn’t really, no one was really stepping up and taking it seriously. And know of course, all that has changed. And for me, it’s this kind of an inevitability that it will spin out because it makes sense. And if we are genuinely looking to SMEs to help us turn the corner post COVID, we have to give them every chance, every fighting chance to use the tools that are available. And maybe for the first time, a little bit more respect than they’ve had over the period of time. Prior to this, because they weren’t deemed the margin wasn’t good enough. There wasn’t a secondary market and some of the lending. And so it wasn’t really that exciting to work with an SME. But as we’ve changed, as the gig economy has changed and all this things are changing, they become much more important in the relationships. You mentioned the figure was an 841,000 API calls in a month?

Simon Lyons: [00:26:45] 830 million.

Helene Panzarino: [00:26:47] Oh sorry. 830 million API calls. And do we have the regular number of users of open banking in the millions now?

Simon Lyons: [00:26:57] Yeah,  we’re well over the 3 million point, obviously Open bank in announces that the big stage posts in that number as well, but  we’re well over 3 million. There’s a very interesting thing there as well, because you know, there was, I saw an article today where somebody said, oh, we should have 30, but actually, , it’s quality, not quantity as well. I mean, 3 million is an enormous part of the working population. And do they know the viewster or did they trust the person they shared their information with that? That’s a key point, but I think the other really key point is there as well as is that we want really high value users, not high value financially, but high value that are engaged in the process and doing it. And what we proved by , the model of lending, the model of statement provision, certainly the HMRC use cases. Now they are VAT, PAYA self assessments and good corporation taxes, life products, they’re high quality users because they’re making a payment, they’re doing something with it. And it’s not just a product. It’s not just a polling one also. I posted it the growth is absolutely incredible, really do. The quality of  what’s happening is unbelievable.

Helene Panzarino: [00:27:56] The HMRC one is very interesting to me because that takes one of the biggest headaches that people have away from them. If they can do in a way where they don’t feel, they definitely have to go to an accountant or they have to rely on their accountant or they have to do something and they’re not really fully aware of what they’re doing. And I think that happens to everybody along the journey. It’s never as simple  as it looks  it might be. So we have a few years now and we’ve from 2018 to now. Where are we going from here?

Simon Lyons: [00:28:20] So you just said HMRC so  let’s look at Breslin. When I walked through the door, I was hell-bent that I needed a trusted precedent. And there was a little bit of dialogue with HMRC that begun and it’s been shaped. So I’m looking off to lead the engagement with the UK government open banking. In the last three weeks, I have spoken to  about 60 different departments. Over the last year I’ve spoken to about 80. We’ve got statements of interest from sort of most of them HMRC, obviously leading them a way. There’s a really, really important thing in the HMRC usage, which is it sets the precedent of people to trust it. So it sets it. Now when you get that as well, when you get fiscal usage, as we’ve looked for, for many, many other payment things, any other initiatives, if the government use it, then it’s safe. You just need to look back at faster payments. In 2009 under PSD one PSR one  to see where that went. Where did we go? For me I can only talk about a segment of it, but the segment I would talk about is, is there is enough demand known realization within the market. There is benefits to open banking for direct populations and indirect populations. So let me give you a couple of examples. How about you walk down the street and you’d take out your phone and there’s a retail store near you and you check if the phones get any catch in it because the store doesn’t want to hold cash. You make an open banking payment and you get a QR code. So you can walk into that store to withdraw well that’s life that works. That’s in place. And what that’s doing is, is that access to cash. It’s allowing banks to work because the more efficient we’ve potentially got a local banking, but much more importantly, we’ve got a very secure environment to get cash. It’s not people standing on the street by an ATM. Utility bills, enormous problem, poverty tariffs. So I’m trying to pick up really, really caught use cases here. There is a large population of the country that doesn’t let using direct debit. Fine. Could be cashflow, could be under the reason. And so they get penalized. So they either get a standard tariff or the independent prepare me to where they’ve got to pay the highest tariff. So we’ve got it wrong around there. The lowest earners pay the highest tariff. So with open banking, we can do something different. Generally  the exclusion point, there was the, either the lack of card or the lack of the ability to take a regular payment. So now, because anybody can make an open banking payment, we’ve turned it from being financial excluded to being digital excluded. So if you’ve got a mobile phone and a bank account, then you can potentially top up your smart meter soon from the comfort of your own home, not the post office, not retail outlet, that’s gone to it. You can work it. That’s high value. The reason it’s high value is the cost of those services to run to the utilities are absolutely astronomical. They are so expensive. The manual ones are always the most expensive. All the things that come out, let’s imagine you just missed your direct debit. Helene you know, you would have for your gas and you ring up and you want to pay, you’ve got to pay by card over the phone, or push a payment where you set the reference. How about we send people a link and we say, we’ve got to trust that we’ve got the gas company and we’ve got Helene and the gas company, Hey, on you’re on the phone. I’m going to send you a link right now. Okay. The benefit that’s lovely, isn’t it? It’s a great payment, not the benefit of shorter calls times. And one of the biggest expenses, the utility set is, outsource calls and the big warehouses full of people that they have to have. You see that the benefit sometimes isn’t banking, it’s actually indirect. There’s a number of other things. I mean, I’ll touch on something if I may. There’s a law in the UK around something called real-time information. And that information is collected by everybody who has a salary paid by backs. It was mandated, I think in 2010, it was put into the back service. And this service is only available to back to users. Now, if you’re an SME and you try got it backs, it’s pretty tough because it’s a credit sanction. It requires risk. So how about we use open banking so we give number one SMEs or bulk method of payment, which they currently don’t have. And then number two, we put that data that the tax man needs in the payment next to it. And then number three, we give the accountant the ability to input a payment and the business of prove it, which doesn’t exist in the law business channels. But much more importantly, we give the banks not sensitive to backs as well. So you’ll see that open banking in that respect is aggregated with other data, but we’re bringing along such a high value use case. Now then you can extrapolate that and take that across to so many other use cases, data with a payment, not inside the payment. So the growth, I believe in my world  comes from a great deal of indirect usage from our large corporates that penalize people for the payment method or penalize them for not sharing their data from that comes a great deal of initiatives from the FinTech world, where they build a market for us. Do you mind if I just expand on something since the memory of man if we build out a channel or a solution, we’ve spent hundreds of millions of pounds on it. API stop that because it means that the solution is market led by smaller, more agile FinTech companies. By more open-minded company, not by the usual enormous implementers. Look at bank platform replacement. Look at  things you could talk about companies that provide KYC and AML. Now you could talk about payment providers, identification, verification. Everything now is much more slick and leaner. Well, the benefit of that means that our big corporates and our government can build a standard and allow the market to fill the void in four weeks. And we did it last year in four days. So I think that that’s the growth. I think it comes from indirect and direct access to deliver high benefit solutions.

Helene Panzarino: [00:33:29] Which I love. And I love the fact that it makes a financially excluded or financially marginalized part of the population able to enjoy being more in the more mainstream and not feel disenfranchised. On the API there’s a couple of someone mentioned to me last week, he said, well, I’m using open banking and it takes me to a page that looks like it’s a scam page, but I don’t know what the actual transaction was. You mentioned SMS as well. And this is just got me thinking about the fact that some of  the scam, again, that we’re experiencing is coming through the through the SMS. So the tech side is the security and the technology  and the API is which I think I understand from some people fall down often, not all the time, is everything in the tech side of things up to the standard that we need it to be, or is there more work to be done there?

Simon Lyons: [00:34:17] I don’t think I can comment on that until technical stands. I can only say one thing that I hear the nervousness about pay by Lincoln, pay by what you get. If you get an unsolicited email from any party, be it a bank post office, then you should ignore it and you should not act on it. And unfortunately they prey on the least digitally savvy. I don’t think that’s an open banking issue. I think that’s a. A trust issue between who you’re dealing with. I saw the post office one recently that got sent out and it was brilliant. But where are the standards as they are at the moment as well, they will evolve. They will get better. They are using bank consent. You know, let’s not be under any illusion said they’ve got it. But as somebody that’s done way too many frauds and he and his life and watch people crying at desks because they’ve been sent an invoice saying we’ve changed our bank details. Please update your details. You have to get a certain level of cynicism into the population. However they receive information. Don’t act verify, ring up first. That’s my advice always, by the way, I don’t think there’s any security that can fix that. Somebody will always breach it. Otherwise we wouldn’t need any well.

Helene Panzarino: [00:35:13] I’ve had at least five of them, myself. One of them was the postal office. One of them was a phone company. I mean, literally they keep coming and you think, well, that looks pretty. We’re all busy. I can understand how it happens all the time, but is it making people jittery? I don’t know.  Because it is happening. It’s happened more over the last year and a half because we’ve been doing everything online.

Simon Lyons: [00:35:29] I’m sorry to interrupt it.  It is really the important thing here as well as. There’s a very interesting argument and it’s a discussion I’m not proposing something. Did we tell people it’s open banking? Because if we look at the moment on the pretty much successful payment pages, they’re not so open banking and I’ll give you an unbelievable stat. I’m not going to tell you who. So there is a proposition out there at the moment launched in March, very successful transmitted, a couple of hundred million pounds, and there’s not been one email or one phone call to say, what is this payment type? What does it, however, Cole was put into a financial organization and yesterday, day before yesterday, no, Friday. And so they don’t know what this is that. That finacial institution said, well, we think it’s a fraud.  What you need to do is we’re going to change all your passwords and reset and reach with new cards. And it was  open banking link that was called pay by bank transfer. Now the problem there is, is that the finance institution weren’t aware of it. So, number one, what we’ve got is because of the usage of the banking channel in open banking, you are redirected to a source of trust. You can see who you’re paying the adoption is really, really good.  It’s far better than we’re taking you to blue diamond sausage page. And this is on your payment page. You’re actually dealing with some people very familiar with. There’s a very interesting point as to whether we educate people what open banking is or we educate people about trust, who you’re dealing with. Now. I am not way too far down the food chain to comment on whether that dialogue is mine or somebody else’s, but there’s definitely a point to say, I’m dealing with united utilities. I trust them. I’m dealing with HMRC. I trust them. I’m dealing with just giving a trust to them. Whereas I don’t trust somebody I don’t know. So a one that will evolve from me. What I think, I think it’s one, that’s got a big place in this discussion.

Helene Panzarino: [00:37:11] Hmm. Very interesting. You’re right. I had this discussion about wealth robo-advisory. The people need to know what’s going on in the black box? If the goals are achieved, does it really matter? Do people really care as long as they get to go? Is it discussion? I mean, there’ll be some geeks and some techies that are gonna want to know every step of the way, but you’re right. If people are achieving what they want to achieve and it’s in a trusted environment, I think probably not. Simon., I can remember the Saturday afternoon when all this came to be and watching the journey and hoping that it was going to benefit SMEs and I’m very bullish on. I’m very bullish on open banking. I think  it’s yet to really come to its full measure. I think SMEs during the pandemic really understood. Well, I can see how this is going to benefit me. So I said silver lining sometimes come out of horrible things, but now I want the wider population to be able to see it. So I’m really interested in watching. Thank you very much for creating the ecosystem and for being there on this leg of the journey. Well, this leg of the journey was important.

Simon Lyons: [00:38:13] There’s so much more to do in making people aware of, I don’t know how you make people aware of something that I’ve just said you don’t want to tell them about this. It’s very, very difficult . I’ll give you a little bit of a synopsis of what I think will happen if I could predict the future. We need brilliant technicians to build up banking, right? We got them. We got an unbelievable level of technical capability. The problem we get then is, is that what we’ve got to do is look at the people who are going to consume it. And what we’re going to do is consume it as use the language for that audience. We have to break down open banking into where it works. SMEs you just talked about. So what do our SMEs want? And we’ve got a set rate and we’ve looked at the city of London sandbox that’s in there in place. There’s some wonderful things going on consultation from HMRC on the 16th of July, about VAT and split payments as a tax, compliant bank count. All of those things are going to play with open banking. But the big thing is, I see open banking is the final piece of the trivial pursuit board, because from that we can build out so many different things. It’s allowed us to access differently. And I look forward to industries and populations looking at this and going, Hey, that helps me. That makes my life easier. And it’s talking in my language at me, at my problem. Exactly my construction and that I believe is where we get the rich success. We’re doing a little bits of it, and I’m very, very proud to say that some of the stuff we’ve done has been incredibly successful and at high adoption as well. But you remember as well, I’ll say verbally with three years in. It’s taken us 108 years to get over the check and we don’t manage that yet and we still got them at each  back there in the 15 hundreds doing lending as well and we’re still lending on pretty much the same basis. So you’ll lot over there in Italy,  running it in Venice, but we’ve got to talk to populations in the right language. And if we do that, whatever happens will be very, very, very exciting. And I’m privileged to have a senses….

Helene Panzarino: [00:39:56] Honestly, it’s just kinda, you are just talking, I’m thinking, Hey, chapter one of the books. So I blow my own horn remedies in finance. We go back to the ,the other thing is  when people want to talk about funding with SMEs they don’t go in there and say,  I’m looking for a Excel spreadsheet for cashflow forecasting. They go in there and say, I’m actually looking to see if I have enough money to buy or do whatever I want to do. So the way the phrasing of it is, the way we go.  People don’t wake up and say, I want a mortgage. They want a house. So they want a flat. It’s the same thing to get us used to thinking, well, here’s the benefit for me, but I get to say it in my language and it’s going to respond in my language. For me we’re on the we’re at the beginning of it and I can’t wait to see where this is going. I’m really pleased the rest of the world is starting to look at it. I think it’s only been a couple of years, as you say. It was going to happen. I look back now and laugh at some of the people who said that it wasn’t going to carry on and I will sit with you and look forward , and we’ll have another conversation in a year and see where we are as well on this. Thank you very much. This has been Open banking on Banking on air with the guests. My guests, my wonderful guests, Simon Lyons.

Simon Lyons: [00:41:02] Thank you very much.


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