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OPEN by Eliga November insights

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In November, the open banking community was inundated with news about the CMA’s decision to delay the sweeping timetable. Wealth management also attracted attention, thanks to Truelayer’s partnership with Lightyear.

 

Open banking sweeping timetable delayed by CMA

In November, it was announced that the Competition and Markets Authority (CMA) agreed to push back the introduction of Variable Recurring Payments (VPRs) by six months. It accepted that the UK banks will not meet the target date of 31 January. With the revised timetable, the CMA will require banks to provide a detailed delivery plan, starting TPP testing and validation in the first quarter of 2022, before they complete a test in a live environment by July.

 

Charlotte Croswell's OBIE update

The news followed the update from Charlotte Crosswell, Chair and Trustee, Open Banking Implementation Entity (OBIE). Crosswell acknowledged that whilst there has been progress, she’s ‘committed to building a culturally progressive, inclusive and fit for purpose organisation.’ She added that there will be several internal developments in the coming weeks, which will be shared directly with the OBIE team and the CMA.

 

Truelayer partners with Lightyear

Truelayer and Lightyear’s partnership will allow the app to deliver instant investment account funding with open banking payments. By connecting customers’ primary bank account to Lightyear, they can leverage instant and secure funding using Payment Initiation. This allows them to fund an account in seconds for more timely investment decisions. The partnership also removes costly transaction fees associated with cards and other payment methods such as PayPal.

According to FinTech Magazine, 'Research by YouGov and TrueLayer has shown that payments directly influence investor satisfaction.' More than half (57%) of current and prospective UK investors said they are more likely to trust a provider that offers instant payments.

 

Bank of England

Bank of England joins 90 countries around the world exploring, developing or launching their own Central Bank Digital Currency (CBDC). While CBDCs will not replace cash and bank deposits, they will complement traditional forms of payment by households and businesses. In 2022, the bank will explore how it can launch a digital currency with the Treasury. CBDC talks are a crucial step in policy development. The consultation will help decide whether the UK is ready to move into a ‘development stage’ with the Bank of England, helping understand the opportunities as well as the risks.

 

Fintech Diversity Radar 2021

Our newsfeed was dominated by the Fintech Diversity Radar 2021 report as women conitnue to be underrepresented in the industry.

  • Only 1.5% of fintech companies are solely founded by women.
  • There are 2.5 times more women CEOs in the Middle East than there are in Europe, and twice as many female chief technical officers in Africa, which also has the highest proportion of female board members.
  • Women-founded companies in Latin America, Asia-Pacific and Africa outperformed their male counterparts on median funding per company.
  • Furthermore, ‘gender-inclusive FinTechs outperform peers – for every dollar of funding received, women-founded FinTechs generate 78 cents in revenue while male-founded FinTechs generate just 31 cents.’

 

Africa's market heats up

Africa has seen a large growth in mobile payments with Vodafone’s M-Pesa system dominating phone-based money transfer and microfinance. As regulations ease, competition is also increasing. Two leading telecom companies, MTN Nigeria Communications Plc and Airtel Africa Plc have been granted permission by the Central Bank of Nigeria to start payment service banks. This permission allows them to offer a full range of financial services, which include bank accounts, mobile money transfers, and microfinancing.

According to FinTech Magazine, payments are seen as a ‘steppingstone’ for top prominent African telecoms providers. More than half of Africans lack proper banks, which signals a significant growth opportunity, if not a challenge for the region, especially when it comes to financial inclusion and a better customer experience.

 

NatWest’s personalised messages

The bank announced that digital engagement has grown 41% year-over-year for the first nine months of 2021. NatWest attributes this increase to its personalised messages, which grew from 72 million in 2020 to 318 million for the same period in 2021, a whopping increase of 340%. Mobile payments also rose by 13% in the same period. The bank has expanded its offering to include video meetings with bankers, and Housemate, an app enabling roommates to split shared bills. In October, the bank acquired the Personal Finance Management app RoosterMoney for children aged 4 to 17.

These strategies help the bank compete against UK neobanks like Revolut, Starling and Monzo. NatWest relies on customer-centric messages as well as customers’ perception that incumbent banks are more trustworthy than challenger banks. According to Insider Intelligence, ‘A June 2021 survey from Klarna and Nepa shows that 61% of UK adults trust established banks while only 17% trusted neobanks.’

 

Join the conversation

Follow Eliga on LinkedIn. We'd love to hear what you think about Africa’s evolving FinTech space and the rise of Central Bank Digital Currencies.