typical of a project planning approach. But a more strategic product planning approach could do wonders for us all. This might be simple, relatively speaking. But it could give everyone the chance to understand clearly who is supposed to do what and why.
First, we have to arrive at what benefits Open Banking might bring to large, diverse markets of the South. These are not places that are digitally immature. Also, far from the often-mentioned stereotype, these are not unbanked. Not any more. Bank account ownership
has grown rapidly in the key South markets, thanks to pinpointed government tactics and policies that focus on transfer of funds and payments to needy people. Quite a few countries have real-time payments which are thriving. Cashless payments at point-of-sale
are widespread. So what can Open Banking do? I would like to propose that it would be less about banking and more about data-sharing by consent. Who needs account-level data in near-real time? A lender would like that. A corporate evaluating possible invoice
based credit to suppliers. A fund manager approached by a potential customer. These are leading players in ecosystems where a lot of value is waiting to be unlocked. Only a fraction of total lending portfolios, for example, are made up of SMEs. Digital lending
still remains a small fraction of overall lending.
So, if a process of request, consent and sharing is set up, then surely an account information service provider and then a payment service provider are justifiable? Perhaps so. On the other hand, there could also be an argument that there are already numerous
roles played by various parties in the payment business. Simplification and modification of the original Open Banking premise can be the way forward.
For example, end to end transaction processing between two business entities can create a rail for data request, consent and transfer. Let us say company A has to be paid by company B for rendering a service. A send a digital invoice, receive a confirmation
of receipt, followed by approval on part of B and then a transfer from account to account. Now let us say that A would like to get financing against it’s invoices to B. The rail set up between the two can be used by the invoice financing firm to seek a request
for A’s account-level data. This can be done if the A2A rail is set up to enable two-way flow of messaging and third parties can be permissioned to integrate post thorough KYB. The rail would need to connect diverse banks together with a seamless token exchange
executed by a clearinghouse. The clearinghouse can act as the enabler of the data transaction as well, without viewing the messages or data.
