Open banking in the fast lane: the insights from Money2020 Europe

As the dust settles from the whirlwind that was Money2020 Europe, we at DirectID are taking a moment to reflect on the most impactful interactions, the newest developments & breakthroughs, and crucial insights gathered from another major event.
Published on
June 16, 2023
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As the dust settles from the whirlwind that was Money2020 Europe, we at DirectID are taking a moment to reflect on the most impactful interactions, the newest developments & breakthroughs, and crucial insights gathered from another major event.

This year's conference was brimming with fintech’s brightest minds, eager to explore and dictate the future of financial services – as longtime go-ers of the Money2020, we expected nothing less. Afterall, this is Europe’s biggest gathering of the industry’s most curious and innovative.  

But this year had a different feeling in the air. There’s a new kid on the block. The buzzword, echoed throughout the venue was - 'open banking.'  

Serving as the opening theme, and referenced consistency throughout, it’s clear that open banking is the new defining factor of the zeitgeist. Adoption has taken off and the technology is touching every corner of financial services, most notably in the credit & risk space.

Anyone who attended Money2020 will know; if you wanted to learn about the ins and outs of open banking, you could at any point in the agenda - whether it be a presentation from an industry leader, a ‘heads together’ workshop or an influential c-level panel.

Data vs. payments

The separation of open banking into two distinct components - payments and data - was a welcomed development at this year’s Money2020. This distinction is crucial as it underscores the unique values and opportunities each component brings to the table.

Open banking payments have gained momentum in creating seamless transactions, but the big talking point was the application of open banking data – we’re seeing adoption from the world’s biggest brands across Europe.

Using financial data in credit decisions is having a significant impact on financial inclusion in the credit risk space – for the first time, people can be assessed on their true, real-time financial profile.  

And this stands to benefit the assessor just as much as the consumer. Lenders are making credit decisions in a fraction of the time, with much higher acceptance rates and less debts being written off. It’s no longer for certain functions within banking or lending – open banking is a ‘hygiene factor’ at every stage of the credit & risk lifecycle.

SME finance

This paradigm shift isn’t just limited to consumer finance. It’s making waves in the SME finance sector too, offering small and medium enterprises access to financial services that were previously out of reach. For many businesses that attended Money2020, open banking was the difference from accessing the funding they need in 24 hours instead of a week – ultimately keeping their businesses afloat in testing times and their cashflow healthy.

Financial inclusion  

The theme of financial inclusion was, deservingly, referenced across the agenda. Our friends over at Open Banking Excellence (OBE) chaired an incredible session ‘Unlocking the potential of financial data to improve financial inclusion’. Helen referenced an important statistic: account ownership spanning the globe increased a staggering 50%, from 51% to 76% in the last decade, so it’s clear how far reaching the benefits of open banking will strive.  

If financial inclusion is to be achieved, it’s becoming clear that the industry is getting behind open banking as a means of getting there.

Predictive cashflow and emerging financial distress

DirectID’s CEO, James Varga, took the stage to discuss how we can innovate to solve key challenges around financial inclusion. We set out to understand, not only how to use real-time data to depict consumer financial profiles in the now, but asked the question: how can we can use the data found within an account to help predict when an individual is likely to fall into financial distress?

DirectID’s innovation project with PhD student, Rui Ying GOH, and Edinburgh University, dissected these challenges and built a set of models to help lenders predict a customer’s future financial behaviours.  

Using predictive techniques DirectID were able to help identify emerging financial distress in consumers – issuing warnings to help lenders better serve and protect consumers. Look out for the ‘predictive cashflow’ product to find out more on future behaviours and early intervention.    

Open banking in the fast lane

Our Chief Commercial Officer, Clare McCaffery, took the stage to present ‘Open banking in the fast lane’ – a powerful session that showcased the remarkable, real-life applications of open banking. Clare’s presentation highlighted 8 of the most compelling use cases happening in the wild – the organisations that are winning by using DirectID’s credit & risk platform.  

The biggest news here is a challenge we’ve had our most inventive minds working on for the last year – if open banking is the technology that gives lenders the most accurate, real-time view of an individual, how do we make this consistent and inclusive in today’s world of gig economy, financial inclusion and work-cations?

Enter the global credit score

Clare spoke at length about some of the work we’ve been doing in this space.  

For consumers, there’s a real-life opportunity to have a score that follows you everywhere - one that reflects the way you earn, and the way you live. For the business case, Clare dived into expert-validated models used to ensure maximum portfolio profitability.  

Some other use cases within our customer set that are transforming how businesses and consumers evaluate credit & risk:

Wrap

Of course, the start of this global movement can be traced back to the UK but the EU is rapidly gaining momentum – Money2020 evidenced this clearly. The ripple effect is now reaching far beyond European borders; from South America's emerging fintech hubs to the bustling digital economies of Asia Pacific.

The open banking revolution is here, and it's here to stay. We’re finally seeing lightning-fast momentum, and as the world becomes increasingly interconnected, data-driven and digital, the potential of open banking only grows.

The world’s biggest brands are using open banking data to create a more inclusive financial ecosystem where credit & risk decisions are based on comprehensive, real-time data.  

DirectID see an opportunity to create this new world - one where everyone can access affordable financial products and services. We’ve been relentlessly pursuing this goal for over a decade. By building the world’s first global credit score, we’re enforcing financial inclusion on a worldwide scale.

Our CEO, James Varga, proudly built the first ever AISP integration and started a chain of events that has led to a global revolution. Since then, our platform has scaled globally and now offers the most comprehensive coverage of any provider of the market.

Through one simple connection, risk managers can access advanced insights for affordability, income verification, financial distress, and more, to make smarter credit & risk decisions.

If there’s one thing that’s been clear from Money2020 Europe – it's that we’re just getting to the good bit.

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