Mynance

Abstract

INNOPAY is an Amsterdam bases consultancy that focusses on ‘transactions. They are founded in 2002 with financial transactions as their main focus. Today, they have shifted their core business to ‘data’ as every form of transaction. INNOPAY is led by the belief “everything transaction” which is translated in into an award-winning same-titled management book. They believe collaboration and data sharing to be the end-goal for finding the highest value-added for all (data) transactions. The challenge The objective of this thesis is to find use cases for the business clients of banks that would be enabled by Open Banking. There are two reasons for the need for such use cases. First, there are no specific use cases directed at open banking at this moment. Second, creating innovative products is becoming the new standard to differentiate for banks. INNOPAY will be able to use this thesis and the use cases that it brings forth to illustrate the benefits of Open Banking to a large variety of different (potential) clients. Thesis Context The user The business clients of banks share touchpoints through the financial function of businesses. The financial function of a business handles the financial assists and their interactions. The financial function is a group of functions, tasks and dynamics that are set up differently for every business. This thesis analyses this complexity and describes how financial tasks between businesses are similar and can be used to analyse the financial function consistently. There is a definite shift in the tasks of the financial function in the lasts couple of years. The financial function is moving from an operational set of tasks to a more strategic set, actively participating with the (corporate) strategy. The current financial function has low affinity Change in the financial landscape Four elements are driving transformation in the financial product and service industry. 1.Technology Technology has been at the forefront of disruptive innovation for multiple decades. Technology is contributing to faster ways of gathering, analysing and securely transferring data anywhere on the planet. Bringing financial professionals together and growing businesses to never before seen sizes. 2.Competition Competition is increasing as challenger banks, and Fintechs are joining the financial product and service industry with new and innovative user-friendly products and services. 3.Customer expectations Consumers are surrounded every day by products and services tailored to their specific needs. Consumers expect user-friendly, fast and intuitive designs. This expectation is no different for business users. 4.Regulation The regulation on the forefront of this changing landscape is Payment Service Directive 2 (PSD2). PSD2 is the first regulation in the world to focus on opening up the banking system. PSD2 mandates the opening up three banking data and functionalities previously monopolised by banks themselves. These three data and functionalities are: 1. Payment initiation services (PIS) Allowing a third party (TPP) to initiate payments from your account 2. Confirmation of availability of funds (CAF) Reviews the current account to see if enough funds are available for the required transaction 3. Account information service (AIS) Allowing a third party (TPP) to access your account(s) information PSD2 opens up three data and functionalities, Open Banking opens up the rest. Open Banking is defined as a business approach in which value creation results from sharing, providing and leveraging access to bank resources. Data, processes and other business capabilities of banks are made available to an ecosystem of Third Parties (e.g. Fintechs, technology vendors, corporate customers) through application programming interfaces (APIs). Meaning, The groundwork Business banking • The competition on the financial product and service landscape is picking up between Incumbent banks, challenger banks and fintech. • Collaboration between financial product and service providers is believed to be the most constructive method of creating value-adding products and services. • Banks will need to focus more on their customer as user expectations are shifting. Open Banking • For banks to gain a competitive advantage, it is essential to open up data and functionalities while creating innovative use cases. • Leveraging Open Banking enabled data, potentially with non-financial data, could result in products unexperienced by financial professionals. • An increase in Open banking adoption is required as it is currently low. This increase can be achieved by creating inspiring use cases and promoting the concept of open banking. The Financial function •The financial has little affinity with Open Banking as it is stil in it’s early adpotion phase. To increase this adpotion they need to be educated and inspired. • The tasks within the financial function are moving from operational to more strategic tasks as more time is freed up primarily due to technological advancements and analytical capabilities. • The richness of data is essential for strategic tasks to make strategic decisions. While the quickness of data has more influence on the operational tasks. • The financial function is looking for safe and secure products and services that are easy to use, interoperable with high analytical capabilities that increase efficiency. The solutions For INNOPAY to be able to present different concepts to different clients, three concepts are designed. They are all presented in an all-in-one dashboard solution called Mynance. The reason for presenting the concepts through this medium is too combat three reoccurring pain points found during this thesis 1.Customer journey – for the financial product and service industry a lot can be won by focussing on the customer journey as this is currently mostly subpar. Having all products and services in one place would facilitate more user comfort 2.Data infrastructure- The number of products and services offered at this moment have major operability issues. Having an all-in-one solution would alleviate this pain. 3.Privacy and security – If all compliance is under one roof, there is no need to trust multiple parties. It also created the possibility to show the user what data they are sharing from one location. OutOfOffice OutOfOffice is a solution for the need for a 24/7 financial function. Instant payments are becoming mainstream and are moving from the consumer to the business realm. This concept relieved the pain for the financial function to be on alert 24/7 as payments can come in and go out after the financial function has gone home. It allows for settings to be predetermined to send a notification when the change in cashflows exceeds a specific limit. OutOfOffice can also be set to undertake actions automatically. BenchmarKing The BenchmarKing is a solution that focusses on the opportunity to use pools of Open Banking data as well as non-banking data to find benchmarks that were previously impossible or extremely difficult to compute, in real-time. Allowing the financial function to critically analyse their position against a variety of segments. Precisely showing a business’s weak and strong points to be able to invest time and funds into different essential business aspects efficiently. Alertify Alertify uses pools of Open Banking data together with non-banking data to find patterns in business processes. It will then notify the user and recommend future steps. These patterns are extracted from historical data and can either negative or positive. If a problem is detected, it will recommend as well as if an opportunity arises. This is done through prescriptive analysis. The quality of prescriptive analysis will be enhanced by artificial intelligence and machine learning. Validation The concepts are designed to a certain degree of detailing to be able to adjust them to use for multiple purposes. INNOPAY can present these concepts as a whole to demonstrate the ‘big picture’ or they can choose to zoom in on a particular aspect of a product (e.g. a specific benchmark metrics or business process pattern) to reach their more niche clients. These concepts are made for presenting and are not designed to be made into actual products. Would that be the case, a great deal of additional research would have to be done with regards to the user interface, user experience, and technical aspects like privacy and security.