By Todd Clyde, CEO
While the road to API connectivity has not been smooth, solid progress is being made in connecting banks to third parties, says Token’s CEO, Todd Clyde.
You have probably seen the headlines about banks not being ready for PSD2 – as the deadline approached and then passed, they were hard to miss. While it is true that less than 50% of banks have met all of the requirements mandated by the EU legislation, this is far from the full story. The open banking outlook for Europe is, in fact, brighter than perhaps you have been led to believe.
Let’s jump back to 14th March, the deadline by which European banks were required to have their ‘dedicated interface’ (open API) ready for testing by PISPs and AISPs. This was the litmus test for banks to prove PSD2 readiness and indicate their willingness to embrace the move towards open financial services. Not a straightforward task especially given the tight timescales, yet 90% of the 2,000 largest banks across Europe did produce the sandboxes and documentation required in time. Considering the scope of this exercise, that’s not a percentage to be scoffed at.
True, it hasn’t been plain sailing. Research, including our own, indicates that less than half of the European banks were ready to go live with their APIs before the 14th September production deadline. But did anyone really expect anything different? And are things really as bleak as others are making out? The short answer is no.
Open banking in the UK
In the UK regulators launched an even stricter timetable than the EU. By 13th January 2018, a full 20 months earlier, the CMA9 (a group of the nine largest banks and building societies across the UK), were mandated to begin a managed rollout of open banking for current accounts.
50% missed the deadline. In reality, it took another year for them all to publish accurate documentation, launch their sandboxes and stabilise their APIs.
PSD2 across Europe also brings key challenges that didn’t apply in the UK. For a start there is no central European directory of all ecosystem participants. And, crucially, there’s no mandated implementation specification. While this fragmentation is undoubtedly slowing market growth, has it halted progress altogether? Not at all.
A marathon, not a sprint
If APIs are to flourish and live up to their potential as the superior option to quick-fix screen scraping and other interface shortcuts, then it’s important that we get them right. Otherwise, they are nothing more than a gimmick (I talk more about this here). For banks to ensure their APIs are production ready, hours of testing and debugging are required. This takes time, patience and technical know-how.
Yet banks do have friends in the fight. Market platform providers, like Token, are connecting fragmented APIs from banks to a single API, standardising account access for third parties and providing a simple and quick way to deliver both data aggregation and payment solutions. This isn’t an easy task and involves securing eIDAS certificates, connecting to sandboxes, working through the stages of connectivity, testing AISP and PISP functionality, then doing it all over again in production. Over 3,300 banks across the UK, Ireland, Poland, Italy, Benelux, the Nordics, France, Germany, Austria and Portugal are benefiting from this approach. By the end of the year, we expect this number to be 4,500.
So progress is being made towards unifying the fragmented landscape and easing connectivity. API calls are increasing by the day and, although consumer and business adoption has been slower than anyone would have liked due to API availability and fragmentation, 2019 can still go down as the year that open banking started to come into its own.
Open banking in 2020… and beyond
Next year, both open banking services adoption and API calls will continue to increase. Dozens of early adopters like Caxton FX and StuRents are already utilising APIs for single payment use cases, like wallet loads and first rental payments. Others too will follow and, by the second half of the year, we can expect more sophisticated use cases in a range of different verticals to be brought to market.
In terms of the APIs themselves? More banks are recognising the commercial opportunities that open banking brings. This means there will be a transition from compliance APIs to premium ones that enable banks to offer richer data sets to third parties which they can charge for; opening the door to a whole host of new use cases, like ‘rule-based’ fund sweeping. In this case, account holders will be able to move money automatically from one account to another, by setting up ‘rules’ or ‘triggers’ that do not require them to be present at the time of the sweep.
These are just a taste of the value-added services that can be achieved using a standards-based API. The key to unlocking them, however, will hinge on banks’ ability to learn from mistakes of the past by partnering with a TPP that can help them achieve an API advantage. As the open banking landscape settles and the new ecosystem unfolds, it is this collaborative approach that will ultimately pave the way to new opportunities and with them new revenues.
Using payments to streamline everyday transport
By Venceslas Cartier, Global Head of Transportation & Smart Mobility at Ingenico Enterprise Retail
Once upon a time the only way to get from A to B on public transport was with cash – and likely a pre-paid ticket bought from a physical office. Nowadays, thanks to technological developments, options range from contactless and mobile payments, to in-app tickets and more. As payment methods advance, consumers and merchants are naturally moving towards Mobility as a Service (MaaS) systems, integrating various forms of transport services into a single mobility service, accessible on demand.
This move towards MaaS does not only streamline the consumer experience, it has other positive impacts too. Incentivising public transport use reduces environmental pollution, improves mental wellbeing by reducing travel-related stress, and aids productivity by freeing up time otherwise spent driving. With this in mind, let’s take a look at the current trends affecting the transport sector, as well as how payments can optimise transportation for both operators and consumers alike.
Optimising transport with payments
The payment process is integral to any service. A payment service provider (PSP) can provide a range of key benefits to operators by proving a gateway to the transportation open payment ecosystem, and ensuring they meet objectives in 3 key areas.
- Environmentally, by reducing the use of personal cars and alleviating pollution and congestion.
- Societally, making urban mobility more inclusive in terms of improving access to all areas and for all socioeconomic classes.
- Economically, by optimising investment in eco-structure and fostering financial transactions, therefore improving the wealth of the city.
Payments professionals’ expertise and technological solutions can make payments easy again for transport operators. They can provide a range of options so that the customer can choose which one is right for them, leveraging the capabilities of the mobility services’ infrastructure (contactless, mobile wallets, P2P, closed-loop, QR code, and blockchain).
Furthermore, they can help promote inclusion and sustainable urban development. For example, methods such as prepaid virtual cards, or mobility accounts linked to a prepaid account can reduce the risks of excluding the unbanked. The environmental impact per kilometre can also be reduced, along with the use of vehicles with lower emissions per person per kilometre.
Finally, PSPs can put merchants’ minds at ease, providing payment liability, allowing aggregation of all due amounts from all mobility service providers, and collecting payments in one single transaction from users while dispatching revenue between mobility service providers.
COVID-19’s disruption to the travel industry cannot be overlooked. In fact, research suggests that public transit ridership is down 70% across the globe since the onset of the virus, longer distance travel has seen reductions of up to 90%, and payment by cash has seen a 60% drop.
Being realistic, these behavioural shifts are unlikely to revert anytime soon, so it’s important for merchants to keep this in mind when thinking about payment methods. More than 70% of consumers and travellers say they are likely to avoid the use of cash over the next six months. As a result, more than 40 countries have already raised their contactless payment threshold, further helping consumers to avoid contact with frequently touched pin pads.
However, the pandemic has only accelerated the way things were heading already and highlighted the benefits. Within the context of the pandemic, transportation needs to reinvent itself and adapt its processes to suit the shift in commuter habits that we’ve already seen and will continue to see in the future.
Other trends to keep an eye on
Contactless has been steadily growing on the transport scene, as have mobile payments and in-app purchases. In fact, the recent move to mobile and online ticketing is the most promising method so far, having seen significant growth in the last few years and having been accelerated by COVID-19 as discussed above. Once consumers move to these easy, convenient, and seamless methods, it’s rare that they revert – so it’s a good idea for operators to think how they can cater to these preferences.
Speed and convenience are a must for busy travellers – but not at the expense of data security. Finding the right payments partner is therefore crucial so operators can safeguard their customers’ personal data, while also keeping on top of other security regulations/features such as P2P encryption, PCI certification, and tokenisation.
Next steps for operators
Public transport is essential for many peoples’ everyday lives – COVID-19 or no COVID-19. As such, mobility service providers can make a great difference to their service and operations by implementing the right solutions.
Grey skies ahead – Malta prepares for a gloomy 2021 if they can’t tackle financial crime
By Dhanum Nursigadoo, ComplyAdvantage
With the summer drawing to a close, many countries who rely significantly on warm weather tourism will be assessing the impact of Covid-19. Being a small island in the middle of the Mediterranean you would expect Malta to be taking a significant economical hit – just like we are seeing in other popular European holiday destinations – but this doesn’t take into account the strength of the Maltese economy.
Emerging from the eurozone crisis with one of the most dynamic economies strategically positioned between three continents, Malta has had one of the lowest unemployment rates in the EU and has recently seen its GDP growth expand year-on-year. But perhaps the most important aspect of the Maltese economy has been its attraction for foreign businesses with only a 5% tax on profits. It is no secret that Malta is a tax haven, probably one of the most effective tax havens in the world.
But you can’t pick and choose who takes shelter, and it’s no secret that money launderers have been taking advantage of the regulatory landscape in this archipelago.
The conditions of a tax haven suit criminal enterprises, who can take advantage of the opaque environment and blend their illegal activities with the same operations enjoyed by high net worth individuals and corporations who are looking to reduce their tax bill. And last year Malta’s keenness for secrecy and avoidance resulted in a damning report by Moneyval – the Council of Europe’s Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) body – which found that while the nation had made some efforts to curb money laundering there was still much to be desired in order to bring the tax haven up to standard. Overall, they were of the opinion that Malta viewed combating money laundering as a non-priority and this resulted in branding Malta with low to partial ratings for 30 out of the 40 Financial Action Task Force (FATF) recommendations.
The findings of the report were stated to have the potential to “create within the wider public the perception that there may exist a culture of inactivity or impunity”. This follows on from a series of international high-profile stories regarding Malta and financial crime. Most shocking was the murder of journalist Daphne Caruana Galizia – who investigated corruption and money laundering in her native country – and was killed by a car-bomb three years ago leading to international outrage and condemnation.
Now Malta is in a race against time to turn their reputation around or they will suffer genuine consequences. The FATF have threatened to place Malta on a “greylist” of high-risk jurisdictions unless they have shown a genuine commitment to combatting financial crime and implemented the recommendations of the Moneyval report. If they fail, this would make Malta the first EU country to make the list and join others such as Panama, Syria and Zimbabwe.
The pandemic has actually given Malta more time to meet these obligations, and it has been widely reported that an initial summer deadline has now been moved to October due to the widespread disruption.
As we head into the autumn, there are signs that Malta has begun to take action. The Malta Financial Services Authority (MFSA) has created and established an empowered AML now headed up by Anthony Eddington, formerly of the UK’s Financial Conduct Authority and who has previous experience of tackling anti-financial crime at Deutsche Bank. This team has already begun working closely with international experts, specifically partners in the US through the US embassy in Malta and the United States Commodities Futures Trading Commission (CFTC). In May this collaboration led to 25 new cases focused on money laundering in particular, and with plans to increase standard inspections and on-site investigations into businesses in Malta, it appears there is a change to the country’s priorities.
Importantly, the report highlighted a problem for countries that choose to become tax havens. In some cases it was not that the Maltese authorities deliberately turned a blind-eye, but simply that they did not have the necessary knowledge to effectively tackle financial crime in the first place. Law enforcement appeared unable to even recognise when crime was occurring.
But this blurring of financial compliance will not help businesses if Malta does indeed become “greylisted” this year. While not as devastating as being blacklisted (the two occupants of this list are Iran and North Korea) there are significant detrimental effects to being put on the FATF greylist. Although this signals that the country is committed to developing AML/CFT plans (unlike the blacklist) it still sends out a warning signal to the world that this is a high-risk area, with the country in question subject to increased monitoring and potential sanctions from the IMF and the World Bank. Make no mistake, being put on the greylist will be catastrophic for Malta’s economy.
It remains to be seen how the work to avoid such a calamity will affect Malta’s tax haven status. Perhaps with an increased fight against financial crime there will be less ability to defend one of Europe’s most competitive tax regimes. But if Malta does not show they are genuinely committed to tackling this problem, then the pandemic disruption to the island’s tourism may be minor in comparison to the grey clouds that now approach their shores.
How will the UK prepare a supply chain for the distribution of the Covid-19 vaccines?
By Don Marshall, Marketing role at Exporta.
The challenge of mobilising a supply chain for the introduction of a global and nationwide vaccine will be enormously complex. The process will be costly, and it’s likely the figures will stretch to the hundreds of millions for both the production of the vaccine itself and its distribution across the UK. We must prepare and plan a supply chain strategy to ensure it reaches those most in need in a timely and safe manner.
The task of immunising a whole population is something that has never been planned or likely imagined by anyone within a standard supply chain. A supply chain that goes directly from the manufacturer to the end consumer, or user/ patient in this case, is complex and goes beyond the scope of any single logistics company. It would have to be conceived and delivered via a large joint effort and collaboration between multiple organisations. Effectively distributing the vaccine will depend on the source of manufacture, its storage requirements, and protection of the vaccines from manufacture through to patient administration.
The majority of vaccines require storage within a specific temperature range and need to be handled safely and in hygienic conditions. Depending on where the vaccines are manufactured, the transport legs will vary; if they are coming from overseas, air freight will increase cost and complexity. In addition to supplying the vaccine, syringes, needles and containers also need to be taken into account when preparing the supply chain.
Securing the specific types of boxes or containers i.e. the lidded containers normally used for transporting pharmaceutical products will mean acquiring them from all available stockists and manufacturers. Delivery vehicles would then need to be considered, with temperature-control factored in. The medical supply chain can inform their approach to distribution by assessing data from previous supply chains, and how large quantities of vaccines have been sent out in the past. Collating successful vaccine delivery examples from other parts of the world would be advantageous here, the more we can do to prepare for a logistical challenge of this magnitude, the better.
The distribution of this COVID vaccine will be unique in its scale and for that reason, additional supply chains will need to be mobilised. Apart from medical supply chains, those best suited for this type of transportation are the fresh/frozen food industries and supermarkets. I would mobilise these businesses to assist with the vaccine’s distribution wherever possible and use their car parks and facilities for the temporary medical centres needed to administer the vaccine to the public.
Using the food industry and supermarket networks would leave the current pharmaceutical supply chains intact for health services, pharmacies and the NHS. It would protect those vital services and continue to serve communities across the UK. Inevitably, it would place a short term strain on food supply chains, but these are supply chains that are well-equipped and versed in coping with excess demand i.e. the spike endured from the brief spell of public panic buying at the start of the crisis. With adequate resourcing and planning, I believe the UK supply chain can and will handle this challenge.
Reconnecting the retail brain: learning from the octopus
By John Malpass, Retail Consultancy Practice Lead at Teradata An octopus has nine brains: one for each tentacle and plus one at...
How robotic technology will disrupt the manufacturing industry
By Marga Hoek, author of The Trillion Dollar Shift Robotics technology has the potential to disrupt industries across all sectors...
RPA, the software robots that finance and banking professionals need to hear about.
By Rory Gray, Vice President of Sales at leading software automation firm, UiPath, explains what role Robotic Process Automation (RPA)...
The rise of nomadic work: how to turn your remote team into a creative force
By Paige Erickson, EMEA MD, Workfront During the first stage of the lockdown in the spring, almost half of Brits...
The value of digital identity in payments
By Vince Graziani, CEO, IDEX Biometrics ASA In ever more challenging times, the payments industry needs to maintain trust by...
Consumers in the COVID era can learn to embrace strong customer authentication
By Ed Whitehead, Signifyd managing director, EMEA The changes that COVID-19 has caused in rapid succession make it hard to...
How NatWest used social media to better target its communications
By DuBose Cole, Head of Strategy, VaynerMedia London For banks, it is imperative to reach their existing – and potential...
It’s time to press ‘reset’ on travel and expense processes
By Rudy Daniello, EVP of Corporations, Amadeus Travel & Expenses(T&E) is a large spend category for companies across the globe....
Covid-19 and the rise of remote payment fraud: how do we catch a digital thief?
By Evgenia Loginova, co-founder and co-CEO of Radar Payments Covid -19 is finding different ways to hurt our finances –...
Effective financial planning will secure businesses a certain future
By Simon Bittlestone, CEO of financial analytics company Metapraxis 2020 has been an unpredictable year, bringing further volatility to already...