‘Open’ is a short word with a long list of meanings. These range from being free to all to join, ready for business or prepared to entertain new ideas. The impact of ‘open’ within financial services today is almost as big as the list of meanings is long.
Accessible, available, inclusive
In the context of payments, open access and innovation is clearly one of the drivers behind the PSD2 in Europe. This is set to open the market to a whole host of PISPs and AISPs as well as telcos, retailers, social media providers, FinTech start-ups and so on.
At the same, there are moves afoot to open up the market to consumers and businesses. Either to give them greater choice by stimulating greater competition amongst providers. Or to include them more in the financial system.
Financial inclusion, particularly in the developing world, has emerged as a significant policy objective over the last decade. There is considerable will among policymakers, the development community and private sector to bring the world’s two billion unbanked people into the formal financial system. So much so, seven out of the 17 UN sustainable development goals mention financial inclusion as an enabler.
The drive towards greater openness — whether this is accessibility, availability or inclusivity — is impacting how financial infrastructure is built. It’s impacting what type of players are able to offer financial products. And how these products themselves are defined.
The new co-petition model
One thing’s for sure, collaboration will become more not less important in the open era. As will knowing when to co-operate and when to compete. As a provider of national payment infrastructure at Tieto we closely follow global best practices for establishing an inclusive ecosystem. One example is the work carried out by the Bill & Melinda Gates Foundation on the Level One Project for a more inclusive economy. Their approach summarises it well.
It’s one of rules and rails, accounts and apps. Participants collaborate on the rules and rails — the governance, interoperability rules and features of the system. And they compete on the accounts and apps — the individually-branded products and services sitting on top of the platform.
Using this new co-petition model, we’ve helped markets collaborate to build national switches on card rails, ISO 20022 rails or a combination of both. These include local card schemes, payment switches and ATM and POS networks. But also account-to-account and stored value mobile wallet platforms.
For example, when we delivered Siirto in Finland, the real-time multi-bank platform for mobile payments we established a payments forum, with presence of all key stakeholders of the ecosystem. Banks, PSPs, terminal vendors and retailers has been involved to define the standards and user experiences for the first services.
This is not always the easiest route. But it’s the right one and one our customers value. Finland now has a state-of-the-art platform natively built for an open and API-driven age. Payment solutions can be developed mobile-first and digital-first; it was also designed for a post PSD2 environment supporting 3rd party account and payment initiation service providers (AISPs and PISPs) from day one.
How Tieto can help
Our offering in realtime payments starts with central infrastructure for clearing and settlement all the way to front-end apps. We also provide advisory services and best practices for national switches moving to an open and instant payment infrastructure.
For more details or further customer references, please contact me Patrik Centellini, Head of Business Development, Financial Services, Tieto, firstname.lastname@example.org
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