Open Banking, APIs, payments innovation and technology
Abdeslam Alaoui, CEO of HPS, talks about Open Banking, invisible payments, fintech, APIs and how banks can offer new user experiences to their customers to The Paypers.
Can you share with us a couple of new trends and technologies that show significant promise in the payment arena?
“Biometrics is a big trend to watch out for in the next year. This technology has the potential to take user experience to the next level, making traditional payment methods completely disappear. Artificial Intelligence also offers a wide range of possibilities, and many solution providers are leveraging the potential of AI for the banking sector. Another technology with a bright future in the payment arena is blockchain, whose applications are still at its early stages, with cryptocurrencies.
All of these new trends and technologies aim to enhance user experience and offer disruptive solutions while maximizing security, protection and trust within the ecosystem.”
How can banks and fintechs leverage Open Banking to their advantage? What is the most effective way to capitalize in the era of Open Banking?
“A fintech delivers financial services using digital technologies to disrupt, reduce costs, increase revenue and remove friction. As an example, fintechs offer mobile banking services that most of the traditional banks offer too, the main difference being the usability and the user experience.
When banks and financial institutions first heard of fintechs, they immediately classified them as potential competitors. Indeed, fintechs started emerging everywhere and offering new digital services, enhancing the overall user experience, at a lower cost.
However, competition is not the only possible outcome for those players. They can instead leverage on each other’s strengths and offer to the market the best of breed solutions.
Fintechs drive innovation, are agile and offer a game-changing solution. On the other side, banks offer their expertise in terms of processes, compliance and regulation. Together, they can work to improve the overall user experience: banks can build a new platform to serve the fintechs and be the backbone to support the launch of fintechs’ services, with their technology and systems. This opportunity is possible thanks to open payment platforms, offering a rich set of APIs that enable fintechs to access banks’ systems.”
What are some new expectations in terms of customer experience when it comes to payments? How does HPS help financial institutions and fintechs to work together and improve overall customer experience?
“The payment experience has shifted towards a “mobile first” payment experience. With the digital wallets, the evolution of POS into mPOS, new players have entered the value chain to offer new services. Mobile is changing the game and is driving new customers’ expectations in banking products and services. Consumers expect payments to be seamless and invisible. They also want their buying experience to be efficient, secure and intuitive.
HPS helps financial institutions to digitalize in a smart, modular and highly automated way by providing a rich set of APIs allowing the management of entire customer lifecycle (boarding, ordering a new card, setting card limits and controls, viewing transactions, and many more). These APIs’ integration enables the banks to expand to an array of distribution channels, including fintechs, and to offer new user experiences to their customers (mobile apps, alternative payments, wearables, NFC, AI, IoT etc).”
How is Open Banking influencing the types of payments services and technologies being developed today? What disruptive payments methods do you see emerging after the proliferation of Open Banking implementation?
“The Open Banking revolution, accelerated by the reviewed European Directive (PSD2), has forced banks to open up their system to foster competition and innovation. Hence, it has a direct impact on how services and technologies are being developed today. As banks need to open their systems to third parties, they need to build an open platform and provide APIs.
With the Open Banking implementation, more direct payment methods will be available. For example, authenticating the payment at the issuing banks’ level or using the customers’ preferred method of authentication (face ID, touch ID, password etc).
Also, it gives the opportunity to the merchants to access the customer bank accounts directly, eliminating the middleman’, the intermediary systems, and therefore cutting costs for the merchants.”
What are the key opportunities and challenges you foresee in terms of how transformative Open Banking will be, and the way it could potentially change how traditional financial services are delivered and consumed?
“Open Banking has changed the rules and reshaped the payment ecosystem to empower innovation, competition, but mainly collaboration though new business and delivery models. New players are now part of the game and coming up with brand new products and solutions.
Open Banking can be a threat, especially for the players that pursue a minimum compliance strategy and stay away from the digital wave. However, regulation can also bring an array of new opportunities such as new ways of banking, serving customer needs and dealing with competitors.
Open Banking has been promoted by regulation and directives in Europe, but it might soon become global and have an impact not only in this region but worldwide.”