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.
Exclusive: Portugal sees green hydrogen output by end-2022, $12 billion in investment lined up
By Sergio Goncalves
LISBON (Reuters) – Portugal will start producing green hydrogen by the end of 2022 and already has private investment worth around 10 billion euros ($12 billion) lined up for eight projects that are expected to move forward, Environment Minister Joao Matos Fernandes said.
He told Reuters in a telephone interview there were also several “pre-contracts for the purchase and assembly of electrolysers” to produce the zero-carbon fuel made by electrolysis out of water using renewable wind and solar energy.
Such hydrogen is more expensive to extract than the heavily polluting conventional method of using heat and chemical reactions to release hydrogen from coal or natural gas, known as brown and grey hydrogen respectively.
Hydrogen is now mostly used in the oil refining industry and to produce ammonia fertilisers, but sectors such as steelmaking, transportation and chemicals are beginning to develop large-scale hydrogen applications to gradually replace fossil fuels as countries try to reduce pollution.
The European Commission has mapped out a plan to scale up green hydrogen projects across polluting sectors to meet a net zero emissions goal by 2050 and become a leader in a market analysts expect to be worth $1.2 trillion by that date.
“By the end of 2022, there will certainly be green hydrogen production in Portugal,” Matos Fernandes said. “Green hydrogen will, over time, allow Portugal to completely change its paradigm and become an energy exporting country.”
He said seven groups had submitted applications under Europe’s IPCEI scheme for common-interest projects to make part of a planned export-oriented “hydrogen cluster” near the port of Sines, from where hydrogen could be shipped to Rotterdam. Total investment there is estimated at some 7 billion euros.
A consortium including Portugal’s main utility EDP, oil company Galp, world’s largest wind turbine maker Vestas, among others, is behind one of the projects.
In Estarreja in north Portugal, local firm Bondalti Chemicals aims to invest 2.4 billion euros in a hydrogen plant.
Altogether, these envisage an installed capacity of over 1,000 megawatts (MW).
Matos Fernandes said Portugal was also negotiating with Spain the construction of a pipeline for renewable gases, including hydrogen, from Sines to France, crossing Spain.
Spain and Portugal also want to develop an ambitious cross-border lithium project taking advantage of the geographical proximity of their lithium deposits and aiming to cover the entire value chain from mining to refining, cell and battery manufacturing to battery recycling, he said.
Portugal is already a large producer of low-grade lithium mainly for the ceramics industry, but is preparing to make higher-grade metal used in electric car batteries.
A much-awaited licensing tender for lithium-bearing areas that has been delayed by the COVID-19 pandemic should take place by the year-end, Matos Fernandes said.
He promised the tender would address environmental concerns by local communities and there would be no lithium mining “at any cost”.
The minister also said Portugal would use its six-month presidency of the Council of the European Union to finalise a landmark law that would make the bloc’s climate targets irreversible and speed up emissions cuts this decade, expecting it to be approved in the first half of 2021.
(Reporting by Sergio Goncalves; Editing by Andrei Khalip and David Evans)
Under fire in EU, AstraZeneca CEO says ‘hopefully’ will meet vaccine supply goals
BRUSSELS (Reuters) – AstraZeneca boss Pascal Soriot said on Thursday he hoped to meet the European Union’s expectations on the number of COVID-19 vaccines the company can deliver to the bloc in the second quarter, after big cuts in the first three months of the year.
The Anglo-Swedish drugmaker has been under fire in the EU for its delayed supplies of shots to the 27-nation bloc, which ordered 300 million doses by the end of June.
“We are working 24/7 to improve delivery and hopefully catch up to the expectations for Q2,” Soriot told EU lawmakers in a public hearing.
Under its contract with the EU, the company has committed to delivering 180 million doses in the second quarter.
Soriot did not mention the 180 million target, but said he was confident the company will be able to increase production in the second quarter using factories outside the EU that had no production problems, including in the United States.
He confirmed the company was trying to get 40 million doses of the COVID-19 vaccine to the EU by the end of March, which is less than half the amount it promised for the quarter in its contract.
The EU, which has fallen far behind the United States and former member Britain in vaccinating its public, has repeatedly urged the firm to deliver more.
Lower-than-expected yields – the amount of vaccine that can be produced from base ingredients – at its factories hurt output in the first three months.
Asked about supplies to Britain, which relies on the same factories used by the EU, Soriot said the former EU member with a population of around 66 million was smaller, and noted that most doses produced in the EU were used to serve the EU which has a population of about 450 million.
Executives from rival drugmakers that have developed or are testing COVID-19 vaccines, including Moderna Inc and CureVac NV were also part of the panel.
But most questions were directed at Soriot amid anger that the company has failed to deliver promised vaccine quantities to the bloc on schedule.
Moderna Chief Executive Officer Stephane Bancel said the company has experienced fluctuations as the U.S. biotech group ramps up output of its COVID-19 vaccine.
He said usually a company would stockpile product ahead of a launch, but it is shipping every dose it makes, leaving it without any spare inventory.
His comments came a day after the company increased its output target for this year and 2022 as it invests in additional manufacturing capacity.
(Reporting by Josephine Mason in London and Francesco Guarascio in Brussels; Editing by Susan Fenton, Bill Berkrot and Keith Weir)
Shift to sun, ski and suburbs gives Airbnb advantage over hotels
By Ankit Ajmera
(Reuters) – Airbnb’s quarterly results are likely to show the pandemic may have helped the home rental company lure leisure travelers away from big hotels during the global travel collapse of 2020.
Weary of being locked up in their homes for months, travelers hit the road and booked homes and cottages on Airbnb, while avoiding flights and downtown hotels, analysts said.
Airbnb accounted for 18% of the total U.S. lodging revenue in 2020, up from 11.5% in 2019, data from hotel analytics provider STR and vacation rental data company AirDNA showed.
It outperformed the hotel industry and online travel agents such as Expedia and Booking.com thanks to its greater offer of ‘sun, ski, and suburban’ rental homes, Cowen & Co analysts said.
(Graphic: Airbnb grabs bigger share of U.S. lodging market in pandemic: https://graphics.reuters.com/AIRBNB-RESULTS/yxmpjxqdopr/chart.png)
For an interactive graphic, click here: https://tmsnrt.rs/3pPbQwH
In 2019, about 90% of Airbnb’s bookings came from leisure travels compared with about 20%-30% for large hotels chains, including Marriott and Hilton, that rely on business travel to grow their profits.
“Unfortunately, the hotel operators do not have as much supply in locations where people are willing to travel,” said Jamie Lane, vice president of research at AirDNA.
Lane said with mass vaccinations later in the year, the share of alternative accommodations including Airbnb will drop before continuing to grow at 2%-3% per year once normal travel patterns return.
(Graphic: Airbnb U.S. sales against top hotels: https://graphics.reuters.com/AIRBNB-RESULTS/gjnpwzkdbvw/chart.png)
For an interactive graphic, click here: https://tmsnrt.rs/3dPKvsd
* The San Francisco-based company is expected to report gross bookings of $23.10 billion in 2020, down from about $38 billion a year earlier, according to the mean estimate of 12 analysts according to Refinitiv; gross bookings are seen rising by 50% in 2021.
* Analysts’ mean estimate for Airbnb’s full-year net loss is $3.52 billion, bigger than a loss of $674.3 million a year earlier. Full-year revenue is expected to drop 32% to $3.27 billion.
WALL STREET SENTIMENT
* Of 34 brokerages, 20 rate Airbnb’s stock “hold”, 12 “buy” or higher and two “sell” or lower
* Wall Street’s median 12-month price target for Airbnb is $156â€‹, about 22% below its last closing price of $200.20.
* The company’s stock has nearly tripled since listing in December
(Graphic: Airbnb’s stock has nearly tripled since debut: https://graphics.reuters.com/AIRBNB-RESULTS/jznpnoqrlvl/chart.png)
For an interactive graphic, click here: https://tmsnrt.rs/3dG2lOd
(Reporting by Ankit Ajmera in Bengaluru; Editing by Sweta Singh and Saumyadeb Chakrabarty)
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