Good day Tweeps its good to have you here and a priviledge to share this amazing topic with you all.... #OpenBanking #AskDeloitte
Please feel free to ask questions and make contributions using #OpenBanking and #AskDeloitte
1. Retail banking has faced a number of disruptive threats in the past, but each time the traditional banks have adapted and grown stronger. #OpenBanking #AskDeloitte
2. Key events include the introduction of telephone banking, online banking in the 90s, the impact of 2008’s global financial crisis and the more recent FinTech explosion. #OpenBanking #AskDeloitte
3. In the past, banks managed all of the inputs and outputs related to banking services. Their data was secret, nicely hidden away from competitors. They controlled distribution because they owned the branches and online banking channels. #OpenBanking
4. So it would be easy to dismiss all the current talk of disruption in the marketplace. However, we believe it really is different this time.
5. The phrase #OpenBanking is used to describe the shift from a closed model to one in which data is shared between different members of the banking ecosystem with authorisation from the customer. #AskDeloitte
6. #OpenBanking enables personal customers and small businesses to share their data securely with other banks and third parties, allowing them to compare products on the basis of their own requirements and to manage their accounts without having to use their bank.. #AskDeloitte
7. So #OpenBanking demands a fundamental rethink of the traditional banking business model, enabling banking to become more customer centric. The exchange of customer data looks set to level the playing field between incumbents & new entrants, increasing competition.#AskDeloitte
8. Deloitte’s research shows that the threat to the traditional banking business model is real. But while the threats to incumbent banks are greater than ever, so are the opportunities. #AskDeloitte #OpenBanking
9. In an extreme scenario, some banks could be relegated to the background as infrastructure providers while other entities – FinTechs, tech giants and price-comparison websites (PCWs), for example – could come to own the customer relationship. #OpenBanking #AskDeloitte
10. However, incumbent banks that embrace open banking to create new sources of revenue and new propositions may enjoy a significant advantage, given their access to existing customers, strong brands and expertise. #OpenBanking #AskDeloitte
11. Incumbents are also in a position to enhance customer loyalty and engagement by harnessing this additional data to provide, for example, a more personalised customer experience and develop innovative new propositions. #OpenBanking #AskDeloitte
12. As a result, incumbent banks have a real opportunity to win the battle for the customer interface and, therefore, the customer relationship. #OpenBanking #AskDeloitte
13. #OpenBanking has been made possible by advances in technology that provide new functionality for consumers and banking entrants alike. The most notable of these – the Application Programming Interface (API). #AskDeloitte
14. .API’s allows developers to incorporate third-party data and services into their applications – has played a particularly important part in allowing regulators to mandate the sharing of bank data. #OpenBanking
15. Such developments would have little impact were there no demand from customers. However, recent Deloitte research, conducted by YouGov among consumers and SMEs, suggests there is an appetite for new propositions. #AskDeloitte #OpenBanking
16. For example, 58 percent of consumers with a mobile banking app could be persuaded to switch to a mobile-only bank to gain the ‘ability to perform a greater number of banking-related actions through the mobile banking app’. #OpenBanking #AskDeloitte
17. Knowing what financial crimes are and the impact to all stakeholders (Bank, regulators and customers), it is imperative we discuss how #OpenBanking can help in this space. #AskDeloitte
18. More sophisticated end of cybercrime, where we see banks and financial institutions actively targeted, payment systems being manipulated and larger cash outs occurring. #OpenBanking #AskDeloitte
19. There’s an increasing trend where banks are becoming more difficult target and as such the attacks are moving to the client base, with large scale and business email compromise fraud carried out against bank’s customer – these should be sound familiar. #OpenBanking
20. So many of us are aware of those phony emails and calls requesting for your bank / card details. Its an indication of a shift to customers rather than just the banks as an institution. #OpenBanking #AskDeloitte
21. In certain quarters, it is believed that too much time is spent by policymakers urging financial institutions to cut off terrorist financing as against high intelligence value inherent in financial transactions and relationships. #OpenBanking
22. While information sharing is relatively well established in the fraud community, the cyber information sharing community is much less mature. The exchange structures and what the legal basis is for those information sharing arrangements is not clear - #OpenBanking
23. Under #Openbanking, the threat of disintermediation has been an issue for banks since PSD2 (revised Payment Service Directive) and now #OpenBanking. Opening up their APIs gives other parties, including competitors, unprecedented access to their data
24. As the market for financial services diversifies and fragments, regulators face new problems in financial crime monitoring and standard-setting. #OpenBanking #AskDeloitte
25. Regulators are likely to find it increasingly difficult to monitor a growing number of smaller players that maybe using new, and possibly anonymous, transaction technologies and diverse sources of customer verification data. #OpenBanking #AskDeloitte
26. From analysis and research, these changes will definitely have a profound effect on financial crime risk management at both an institutional and market-wide level. #OpenBanking
27. The world of FinTech start-ups is crowded thanks to low barriers to entry and low operational costs. The question is, does this come with new financial crime risks? #OpenBanking #AskDeloitte
28. Major banks are able to draw upon mature and tested controls in both customer on-boarding and transaction monitoring, and FinTechs would be required to have similar capabilities. #OpenBanking #AskDeloitte
29. This presents an opportunity for banks and FinTechs to collaborate to address this potential risks. #OpenBanking #AskDeloitte
30. The question remains: in the evolving world of financial services, does the way that banks, regulators, and more recently FinTechs, manage financial crime risks remain appropriate? #OpenBanking #AskDeloitte
31. We believe now is the time to re-examine the overall approach, to review what risks are emerging and what responses are necessary.#OpenBanking #AskDeloitte
32. The typical customer no longer expects to buy financial services from a single provider. Foreign exchange maybe bought through a currency transfer FinTech, while borrowing and lending maybe conducted through crowdfunding or peer-to –peer services. #OpenBanking #AskDeloitte
33. Both FinTechs and banks now look for fast and simple methods of taking on their customers while complying with their legal and regulatory obligations in relation to financial crime and fraud prevention. #OpenBanking #AskDeloitte
34. Organisations are applying a more varied range of on-boarding controls. While some request information directly from customers, others utilise information provided by third parties including Facebook and Google. #OpenBanking #AskDeloitte
35. The rise of new services such as crowd funding and P2P (peer-to-peer) lending is also introducing new financial crime risks to which traditional models were less exposed. Does MMM sound familiar? #OpenBanking #AskDeloitte
36. The global nature of these platforms and the relatively high volumes of lending opportunities mean organisations are less likely to be able to conduct ‘know your customer’ (KYC) controls on their users to the same extent as traditional banks. #OpenBanking #AskDeloitte
37. This opens the possibility of legitimate funding being channelled into misleading or fraudulent investments, or the use of legitimate projects as money-laundering vehicles - Financial crimes.. #OpenBanking #AskDeloitte
38. Neither banks nor regulators have been able to develop a clear approach to dealing with alternative lender risks posed by P2P lending, not least due to the rate at which new lenders are entering the market. #OpenBanking #AskDeloitte
39. In Nigeria, adoption of cryptocurrencies has risen over the past two years with trading reaching $1.3 million in February 2017. #OpenBanking #AskDeloitte
40. Despite their own experiments with blockchain technologies, many banks are taking a ‘safety first’ approach to cryptocurrencies by blocking customer transactions that appear to be transfers between fiat currencies and cryptocurrencies. #OpenBanking #AskDeloitte
41. Given that Nigeria is a key destination of migrant remittances, and with the fluctuations in the value of naira, acceptance and usage of cryptocurrencies in the country is expected to soar in the near future. #OpenBanking #AskDeloitte
42. With this, a new regulatory and commercial approach is clearly needed. #OpenBanking #AskDeloitte
43. How will the Industry respond? We see different types of business models emerging in risk management. The choices that individual providers make will determine which of these models becomes dominant. #OpenBanking #AskDeloitte
44. The 3 models we think are applicable considering disruptions are;
i. The Service provider model
ii. The Market-owned model
iii. The customer centric model
#OpenBanking #AskDeloitte
i. The Service provider model
ii. The Market-owned model
iii. The customer centric model
#OpenBanking #AskDeloitte
45. Strategies for Success - The ability of banks and FinTechs to overcome the challenges of managing financial crime risk in a disrupted environment depend on a number of factors, with responsibilities lying with incumbent banks, new entrants and regulatory bodies. #OpenBanking
46. The Role of the Regulator – As the market evolves and the outright dominance of a few large banks is diminished, regulators need to establish new methods of monitoring for the larger number of smaller but significant players. #OpenBanking #AskDeloitte
47. Regulators must find a way to rebalance accountability for financial crime risk management, offering incentives and enforcing penalties to all players in the market to drive the desired behaviours. #OpenBanking #AskDeloitte
48. Providers must play to their strengths: Banks and FinTechs need to harness industry expertise and experience in financial crime risk management and compliance, and combine this with innovative technology and data analytics to address customer and market problems. #OpenBanking
49. But they need to do this by collaborating around their individual skills and experience to develop new approaches to managing financial crime risks. #OpenBanking #AskDeloitte
50. To conlcude: The financial services industry is changing rapidly, with potentially radical implications for the future of banking. With these changes come new financial crime risks arising from the products and services to tech-enabled consumers. #OpenBanking #AskDeloitte
51. A combination of the 3 Models highlighted above is highly recommended and all parties in this ecosystem would have to effectively 'collaborate' to make this happen #OpenBanking #AskDeloitte
