The recent announcement of the Global Open Finance Challenge caused a stir in the fintech landscape – and for good reason. Speaking to Finextra about the upcoming global competition, representatives from NatWest Group revealed not only the motivations behind the bank’s decision to launch this initiative, but also the impressive bonus offered to the teams that win the top prizes. .

CIBC, Itaú Unibanco, National Australia Bank and NatWest Group are working together to host the virtual event, which will take place in October 2021 and aims to build a stronger and more progressive global banking and financial industry. With the support of Amazon Web Services (AWS), the four banks invite entrepreneurs and innovators to test new customer solutions globally.

The banks also worked with Oolys, an Application Programming Interface (API) infrastructure platform, to develop a sandbox environment, running on AWS, that replicates the banks’ existing infrastructure and enables rapid testing. for third parties. Each of the four banks provide a set of shared APIs – comprising a combination of open banking, open funding and experimental – and teams will have the opportunity to test, build and validate solutions in the sandbox, supported by mentoring. leading banks.

AWS will also provide advisory support to help participants build their prototypes, ahead of the evaluation rounds in November.

Paul Thwaite, CEO of Commercial Banking, NatWest Group, said: “We have already seen the important role APIs can play for NatWest Group businesses and business customers – for example, by facilitating open bank payments, helping to reduce fraud, by supporting advanced cash flow. management and provide customers with real-time connectivity to their account and transaction data. APIs also allow us to serve our customers through the channels that work best for them, whether through cloud accounting or through our mobile app.

Open banking and open finance for an open future

Speaking to Finextra about the importance NatWest Group places on continued innovation around open banking, Daniel Globerson, Head of API Banking at NatWest Group, said the very title of his role reaffirms that the world of open banking is seen by the group. like a great opportunity.

He observes that while many institutions initially saw open banking as a mere mandate or regulatory obligation to comply with, NatWest Group saw it as an opportunity to provide products and services to customers in new and interesting ways. “It was an opportunity to partner with new, emerging and established fintechs to deepen relationships with our clients and help our clients succeed in the emerging digital economy,” notes Globerson.

This mindset has become particularly valuable to NatWest Group as the focus has shifted from open banking to the more global open finance paradigm. Globeerson believes that open finance is just another step on the road to smart data: “Around the world, we are seeing an amalgamation of open banking, consumer data rights and other types of data. regulations designed to stimulate innovation, competition and, more generally, to put the public in control of their own data.

“From that perspective, when thinking about open finance, financial institutions should see the benefits of an even larger ecosystem going beyond accounts and payments and open banking, to pensions,” investments, loans, insurance and beyond. “

He argues that open finance will give institutions much more creativity to meet client needs – leveraging new data sources to deliver a more complete picture of clients’ financial lives, deeper insights and a suite of products. more finely tuned: “When it comes to financial health, having the full picture, in what we might describe as open finance, is certainly a big step, and it’s a catalyst for financial institutions, again, provide a broader view of what consumers really need.

Globeerson points out that banks are more than just “accounts and payments” – they are also trusted institutions. Indeed, there is a whole new opportunity that exists in a digital economy for financial institutions to continue to build trust by providing secure storage of assets. digital assets and records, as well as validation of customer identities
in the digital ecosystem, he adds.

“The more openness we have, the more opportunities there will be for financial institutions to take a leadership position in offering digital services that also build trust, and not just a particular product.”

Improving the customer experience: the efficient use of data and technology

When it comes to capitalizing on the opportunities inherent in open banking and open finance, Globerson believes more can be done.

From the perspective of improving outcomes for clients, he notes that financial institutions and new entrants, such as fintechs, might provide more tailored solutions to clients who might otherwise struggle to take a holistic view of their business. their finances. This would help them understand the choices available and take more proactive control over their financial health.

“With open banking, we’ve seen things like personal financial management, services in the cloud accounting space, cash flow management, and capabilities like alternative lending. This is just the tip of the iceberg. “

Globeerson adds that since most of the attention has been focused on individuals, individuals or individuals, there are still many opportunities for business customers to thrive in an open data economy – “not just in the types of services that businesses might find among institutions and fintechs, but businesses are also leveraging these tools to provide their customers with enhanced experiences, ”he explains.

“If some of our business customers want proof of a customer’s identity, that’s something in an open world that we would definitely help them do. Not only does it support customers, but it also supports businesses. It’s a win-win for everyone.

Competition breeds success

While opportunities remain in open banking and open finance, Globerson talks about the position financial institutions occupy and try to maintain in an ecosystem that is increasingly open to new innovative players and agile operators. : “In my opinion, both in our market and others, financial institutions are in a unique position for customers to trust their data and privacy, not to mention a secure pool of funds.

While many institutions have been in business for some time (hundreds of years, in the case of NatWest Group), Globerson cautions that the fact that NatWest Group was not designed to monetize data in exchange for services is a real competitive advantage.

“I think it’s important that we are trusted with data and privacy and that our financial success does not depend on monetizing other people’s data in exchange for their service offering. By leveraging this position of trust and longevity – with a strong emphasis on innovation and partnerships – I believe financial institutions like ours are quite capable of competing and thriving in the new world.

Details of the challenge itself

Three areas have been identified by participating banks on which competitors need to focus:

1. How can we better serve our corporate and business customers, as well as the general public, by providing high value-added digital services?
2. How can we help current and new customers access banking services through more convenient or relevant digital channels?
3. How can we find innovative ways to help our customers make better climate and sustainability decisions?

The challenge caught the attention of industry heavyweights, and the top 12 teams will pitch their ideas to a panel of executives from the four participating banks, as well as executives from private equity and tech organizations. Notable figures include:

– Victor Dodig, President and CEO, CIBC

– Milton Maluhy Filho, CEO, Itau Unibanco

– Ross McEwan, Group CEO, National Australia Bank

– Alison Rose, CEO, NatWest Group

– Werner Vogels, CTO, Amazon

– Rob Heyvaert, Managing Partner, Motive Partners

Globeerson believes the event attracted this caliber of involvement not only because of the banks and CEOs attending, but also because there is a distinct appeal to getting involved with the people and actors at ‘heart. proverbial innovation ”.

The uniqueness of the event is the result of the diversity of the participants in terms of geography and experience. Indeed, the teams invited to participate will be made up of innovators from a mix of universities, start-ups, established fintechs.
and great technologies.

Thwaite notes that he is interested to see how the innovators participating in the Challenge are using NatWest Group APIs to create new solutions to serve customers :, as well as new and powerful partnerships, which will help us serve our customers through the channel. of their choice.

The prize for the winners of the Challenge

There will be four winning teams selected under the Global Open Finance Challenge, with one winner for each of the three areas of the challenge, as well as one overall winner.

The winning teams will each have the chance to participate in a post-event talent incubation program, which Globerson says will include a series of highly coveted awards including:

1. Proof of Concept with one or more banks – whereby the banks will provide a dedicated team to collaborate and support the project, as well as feedback from frontline and client research groups.
2. Pitch Ventures – winners will have the opportunity to pitch in front of all of the bank’s Ventures teams, to discuss investment opportunities, whether inside or outside the bank.
3. Local market orientation – meetings and briefings with experts from all banks will be arranged, to support local market customer segment knowledge, regulation, etc.
4. Senior Management Exposure – Internal decision makers will be available for winners to engage, receive feedback, engage with potential partnerships and leverage their networks.
5. Media Coverage – Press releases will be posted on global banking, fintech and tech media channels.
6. Solution Architecture – AWS will provide support with functional and technical designs from their own solution architects.

NatWest encourages teams from fintechs, large global organizations, start-ups and start-ups, and universities to join the Open Finance Challenge. The grand finale will take place on November 16, 2021 and registration for the event is open here until September 26.