AWS Marketplace

Understanding open finance’s impact on financial services

Open finance is a relatively recent development in the financial technology (fintech) space. The Financial Conduct Authority in the UK defines open finance as “an opportunity to build on the concept of open banking and allow consumers and small and medium enterprises (SMEs) to access and share their data with third-party providers.” This transformation is forged upon application programming interfaces (APIs) that enable the near-real-time transfer of financial information between organizations. Due to these APIs, transactions that used to take days or weeks can now occur within seconds. And this change is becoming a key to the future of financial services.

AWS Marketplace recently conducted a panel discussion on this topic. The session Open finance impact on financial services: a panel discussion brought together guest speakers and industry thought leaders from Forrester, Yapily, and FinConecta. Together, they shared their thoughts on how open finance is changing the financial services industry.

Open finance is reshaping financial services

In Forrester’s research into the future of financial services, they identify the following four factors for future success.

  • Invisible finance: Embed financial services that are delivered via intelligent agents or within platforms, ecosystems, or marketplaces. These services usually appear at the customer’s moment of need, often at the expense of brand visibility.
  • Connected: Be present in the ecosystems and products that your customers use. Share data and resources across technologies, partnerships, ecosystems, and platforms via APIs to deliver financial outcomes.
  • Insights-driven: Gain wisdom from stockpiled customer data and combine that data with other sources to drive customer value.
  • Purposeful: Align with customer environmental and social values to build values-driven ecosystems that deliver financial well-being.

Open finance can help financial service providers deliver on these themes. Forrester contends that open finance is the future of financial services. And they argue that this future will be powered by data connectivity and interoperability across a collaborative ecosystem.

Forrester asserts that aggregators and intermediaries already delivering data connectivity and interoperability across industries will begin to build increasing strength in the ecosystem. They posit that the most successful players will be firms that collaborate effectively, building trust among their customers and their ecosystem. The Forrester report concludes that connectivity and collaboration will be the dominant business model.

Sellers or independent software vendors (ISVs) of financial services solutions in AWS Marketplace help companies drive the connectivity and collaboration required for open finance.

The following sections share two stories from customers about how they implemented open finance.

Volt uses data to help drive the customer experience with Yapily

Volt was founded with a mission to build the world’s first real-time global payment network. To do that, it wanted to use open banking infrastructure providers to connect to bank APIs. Those connections would enable it to initiate real-time account-to-account payments between consumers and businesses. The company was challenged by the continued domination of card payments, despite their being expensive for merchants and taking days to settle. It also faced inconsistent standards for payment infrastructures across the European Union (EU) and globally.

Volt turned to Yapily, an infrastructure provider of direct API connectivity to personal, business, and corporate accounts across the United Kingdom and the EU. The company powers its customers’ businesses with the latest secure APIs. With its focus on pure API service integration, it offers an exceptional depth of coverage and reliability.

Alongside other open banking suppliers, Yapily helped Volt connect to various banks with multiple API types across Europe in order to deliver a consistent and reliable real-time payment experience. Via account-to-account payments, consumers could make real-time payments directly from their banks. This open banking infrastructure enabled Volt to increase payment initiation consents over the last six months. It also boosted initiation success rates at all major banks, reduced settlement times for merchants, and offered a more streamlined payment experience.

Accelerating revenue growth with FinConecta

Grupo LAFISE, founded in 1985, is a diversified business holding company that integrates and stimulates Central America’s markets through an advanced technology platform. The company wanted to move forward with participating in API-based business models, monetizing its assets, and generating new revenue streams. It was eager to launch a developer portal and expose APIs for three specific use cases: know your customer, opening accounts, and transfers. LAFISE was also hoping to partner with non-financial companies interested in launching financial products.

LAFISE looked to FinConecta, a global interconnected financial ecosystem that provides the technology infrastructure to connect financial institutions with global fintech solutions. FinConecta’s platform enabled LAFISE to monetize its infrastructure and banking processes by exposing APIs and facilitating relationships with third-party providers. LAFISE achieved continuous innovation and connected with developers and other parties through a comprehensive and rebranded developer portal. By using FinConecta’s infrastructure and standardized API catalog, LAFISE was able to accelerate time to market and efficiently launch new digital products. The company also improved its customer experience while promoting innovation and increasing the speed of its digital transformation.

Next steps

About the author

Shaheen Kanda is the Global Category Lead for FSI and Insurance at AWS Marketplace. Before joining AWS, she founded two fintech startups and spent a decade working as a leveraged finance banker in New York City.