 So I appreciate you guys coming because there's like four other sessions going on with panels and stuff like that So it's nice of you guys to make it out to this open banking one so in this presentation, I'm going to give a brief discussion of my organization and myself I'm going to introduce the concept of open banking and how it's progressing Around the world. I'll talk about the different roles that financial institutions are taking in light of this new open banking business model most going to touch on Why open banking is probably not going to shake up the banks predominant position as some may think this is It's not really revolutionary. It's more evolutionary And that's going to lead me into discussing about open source and open standards I'm going to describe sort of at the fundamental level why open banking policy is aligned with the open source way And then I'm going to give a couple examples of what governments are doing in the world around this and talk about the difference between open source and open standards and then open standards and quasi and proprietary standards quasi-quasi open standards and Why these quasi open and proprietary standards aren't really aligned with the goals of open banking And then I'm going to finish with a bit of a strategic sort of recommendations, I guess you could say for why banks should be sort of pushing for open standards Feel free to interrupt me at any point. There's not that many people here I can hear you if you just raise your hand or just speak over me Happy to have a conversation So yeah, I'll just a little bit about me. I'm from Ottawa, Canada I work for an organization called the Large Credit Union Coalition. I Am a member of the Digital Identity Authentication Council of Canada, which is promoting digital ID adoption in Canada We just had the really cool thing happen where a company called Interact which is the Canadian sort of payments facilitator acquired a company's license called Secure Key which is providing digital ID So we're kind of getting a bank ID sort of like in switch, sorry Sweden in Canada, which is quite exciting I'm also a member of the Open Banking Initiative Canada, which is promoting open banking And I'm working on my CDMP, which is certified data management professional so Yeah, the purpose of the slide is just to give a quick overview of the Large Credit Coalition. These are all of our brands. There's 12 credit unions My position here is one of speaking here is not necessarily effective of these organizations The Canadian credit union system it has 5.9 million members in the English speaking one There's a separate system in Quebec. It's a company called or cooperative called Desjardins The Canadian or sorry the English side has 273 billion assets under management. We have 1700 branches 58,000 employees in aggregate and We're the only financial institution in 394 Canadian communities, which we see as a source of pride because we're providing services that they normally wouldn't get if you look at the graph here the largest The largest 100 have about 90% of the system assets, but we have about 235 Credit unions, so the it's like a really long skew as far as assets go when you're looking at the largest 10 Which is the group that I essentially represent. We have about half of the system assets So that would be I guess closer to like 150 billion for the organizations I represent on the what I do with the Credit unions is this these green highlighted ones. So we provide advice or Engage in this the Canadian ecosystem around API Gateways consent management digital ID cyber security and then governance on an actual sort of open banking market And then we talk about all these things with regulators So a registry accreditation digital ID API standards The what the utility or platform is going to look like and data governance and all those important things that are required for Open banking so the One to the point for context as well because you might be like this guy's a total noob for the stuff You might already be like farther ahead on me on this, but we're We have similar challenges as the established banks which is that we're seeing this rapid digitization of a services and and internal systems and We have never really had to do that as part of our value chain. We've always been able to do this stuff internally And whereas you have these fintechs that are building things just for specific connections to that value chain and have done everything sort of in a focus targeted and modern framework way we don't have that and so We haven't built our internal applications to work with external networks And so we're having a lot of challenges in working through that So what is open banking? It's a system that allows consumers to share their financial data between financial institutions and accredited third-party service providers so fintechs or Agencies governments NGOs, etc. It's supposed to give consumers greater choice and control over their data And it's supposed to be done in a secure way. So essentially to remove the Option in at least in Canada one of the main impetuses was to remove the option of screen scraping Which is essentially to grab the data from the site using a bot and that data Isn't necessarily accurate isn't necessarily secure because you're providing your username and password to a third-party And that might be aggregating it and causing a bunch of issues So the model here is that this is the current model where this guy has to take all this financial data from all these different financial institutions and then he has to aggregate it himself and The open banking model where you have a credit union or a bank and they do all the aggregation for you And that person doesn't have to do all the work. And so they're a lot happier so in The world of open banking so government regulated open banking is is I would argue de facto an open source open banking in that The argument would be that the government regulation is controlled by the people and it's therefore automatically in the commons and open source is essentially a public good Market-led open banking on the other hand in often becomes proprietary the strategy of the market is to try and get ahead of that regulation and so often Markets will start introduce or market-led initiatives will start introducing things like market codes of conduct or sort of principles based solutions and those become sort of pragmatically useless because they They create barriers that essentially try to protect or provide a defensive stance for the existing status quo that don't eventually Don't really get adopted or it just becomes Reinforcement of the status quo so when you see places like the European Union and the UK Introducing government regulated standards. They're the ones who really sort of kicked off open banking as a really For the rest of the world to take it on If it wasn't for the governments of the European Union in the UK to actually say we're going to sort of mandate standards the rest of the world wouldn't have They'd be moving a lot slower essentially So I think even sorry, I'm just gonna one last point here. I think you even see this With the market-led ones as I was saying about how The market-led ones are become sort of not super useful The Berlin group just launched I guess last year and some of you might know more than me about this But they just launched Open finance group, which is essentially taking their next gen PSD to framework But then adding more variables to it and they're actually doing it now and sort of an open Standards development way as being a bit more transparent Which I think is pretty neat because the previous way was it was just the banks discussing and now they're trying to open it up for like more discussion So regarding business models This is from the European Banking Association It's around since it's 2016 essentially a model of how Financial institutions can take different roles The you can say that you know all traditional banks have this Integrated role where they offer the products and services They offer the connections and then they do the distribution to the member or the customer And then there's different sort of models now where you could be a producer and then allow someone else to your distribution Of your products and services on a platform for example You could be the platform provider that then takes the products that are sort of distributed Or you could do the distributor role where a bank may say we don't even want to develop these products and services So we're just going to distribute it to our members and charge some sort of fee around that This is Sorry, I'm just reading my notes here and I wrote them. Oh, yeah the We're seeing this sort of evolution of traditional finance into playing one of these roles in the open banking ecosystem the focus is going to be Is a little bit debate around this but the focus is that it would no longer be about sort of building a product but it would actually be about creating experiences and and you know it kind of goes into sort of IT your startup logic, but focusing on the experience rather than product production and That difference of approach leads to sort of less vertical stack integration such as in this integrator role and and more about leveraging what the markets already developed and And to be essentially becoming a curator of like the best products for your clients your members So that changes the mindset from that internal focus with the client in mind and to having one with the client in mind Which should lead to sort of a less rigid experience at your Traditional bank and into a more user-friendly one And so the realities of open banking market forces this sort of ecosystem model is leading to Established FIs being afraid of this and and wanting to maintain sort of market dominance And so they're starting to sort of drag their feet and they're saying we're not gonna it's gonna take us a decade I think there was a survey that just came out last week For UK saying that it's gonna take a decade for open banking to be implemented in in the UK Which I think is not necessarily true But what it's done all that feed dragging has created this cottage industry of all these fintechs and other companies that are becoming sort of aggregators or platform providers to help build those connections and Essentially, that's a huge pain in the butt To do because you have to work with a bunch of different ones the API's that are being published are not necessarily Standardized it just creates just a ton of work So I Would say that that's sort of the banking industry and aggregate not all of them like there's BBVA and Santander that are various NHS BC that are very sort of pro open banking and they see the Benefits, but there are others that are I'd say most are saying, you know, we're gonna drag our feet There's just too much to do. It's it's a we have legacy products and services and and core banking systems that just gonna take too long and I would argue That they shouldn't worry about that and so I'm gonna get into some academic theory here So there's these two concepts there's a paper that's came out in last year by Lam and Lou and I believe the title was actually I have it on my phone. Let me just Grab it here. So I don't forget it was does data portability facilitate entry and it was in the International Journal of Industrial Organization and essentially there's a small but growing academic literature that explores the implications of the adoption of data portability policies, which is sort of a similar to Open Banking and what's in GDPR and and PTSD to et cetera? So Lam and Lou They developed an economic model to explore the implications of these two effects that they say arise from data portability as Currently is formulated in the EU for PSD to and these two are switching facilitation and demand expansion So switching facilitation as the graphic I put up here shows it or tries to show anyways is that if the rules make it easy for consumers to move their information then this should reduce the lock-in effect that currently Characterizes many consumer business relationships. So if someone gets really frustrated With their data being held and they're losing money or whatever time et cetera They're gonna then use the open banking regulations With the standardized data sharing that's mandated by the government to then share it with Or port their data over to a more competitive bank or financial institution and they'll be happy So that's sort of the main thing that the banks are I think afraid of they're like if we open up our data Then people are just gonna be able to something more competitive And that's a threat that you know We still think about even at the credit unions is that you have venture capital coming in from And sponsoring fintechs that are then offering things for free. So in Canada, we just had Big, you know multi-million dollar Fintech or venture capital firm funding coming to call well simple to offer free trading for all of our for like commission free trading for ETFs and stocks and stuff like that and all the traditional banks are still charging you like eight bucks or something like that So people are switching and they're afraid that venture capital can just three keep on throwing so much money at it that people will switch So they're like no, we don't want to share our data, but there's this other factor which is going back to the model I was showing you guys is that It's called the demand expansion effects and so the demand expansion effect essentially says That if the data is actually easier to port It also makes it easier for customers to share their information with their current service providers And if the incumbents invest heavily in providing, you know Value added data analysis and aggregation services or just from pure network effects of there's so many different things out there And you have a really convenient Consent management tool or something with your bank They're not going to move. It's going to deepen the existing relationship with their clients So in certain circumstances This demand expansion effect could outweigh the switching facilitation effects and that would entrench the incumbents relationship And first and first all a new entry or stop Challenger banks were coming in and trying to sort of take over with competitive offers There's also the the factor that Open banking regulation and in the finance sector regulation is very strong And these technical standards to sort of program that regulation could create high implementation costs for for new firms So essentially the argument is that given that open banking is becoming regulated everywhere as I was showing in the previous slides with the world map and that the demand expansion effect would have a Would have a stronger effect than switching facilitation on existing clients Provided that the banks are not sticking it ahead in the sands and developing all the analytics tools and enhanced data capabilities banks should actually be augmenting their data analysis functionality and welcoming open banking adoption And they should be encouraging the use of open standards to make it easier for new entrants to share their data Because they would want to build that demand expansion effect But Actually, I'm going to do a little bit of open bank stuff Which I might run through pretty quick like everyone here is relatively familiar with open banking or sorry open source and Assume because you guys are all at the conference. So the argument I was making here is that Open banking should follow open sources principles of common good to achieve its policy objectives As well as the bank's objectives and I'm using this picture here I found off the internet from an early session of Parliament which ironically I was reading up on and apparently Parliament was closed to public access until the late 1800s Like you actually couldn't figure out what was going on But I think the principle still remains that it was a group of people coming together to discuss issues publicly and collaborating These are open banking policy goals And these are open the open source way the GitHub site the open source way that sort of lists out The principles I think red hat developed that But so things like transparency collaboration Released earlier really soft in Which could be a sort of proxy to the pragmatism and then inclusive meritocracy and community Align with a lot of what you see in different open banking policy Goals that are released by different governments so the Canadian government for example These are the ones from the Canadian government But they're very similar to what the UK and Australia put out and that's around transparency open standards industry collaboration Fair representation and community and interoperability What you're seeing in different Regions as well at least and this was sort of mentioned at an earlier presentation today about regulatory Regimes and regulators becoming changing sort of their policy process and their regulatory practices this is the Australia's consumer data standards like consumer data rate is the name of their open banking legislation This is actually all on github. You can go to the site and you can come standards and you can see all the different Issues that they've raised so they essentially propose a standard and they have industry consumer aviskey groups Government actually commenting on the issue to develop it. This is actually be done Transparenly and in the open which I think is amazing. I've never seen this before But this is like an open source way of doing Policy development and regulation which you again, you don't really see But there's lots of examples though. If you go to the open source observatory I think this is something that was funded by the EU Commission and they sort of just Crawled in that for different governments announcing open source initiatives. So we're seeing this Transition into The adoption of sort of the open source way when it comes to setting policy Which I think is pretty cool. I'm gonna try and go quickly because I only have a few more minutes left And then I'll just briefly talk about open source and open standards These are the sort of the main Differences between open source and open standards Standards take longer to develop and change standards of consensus based compromises open sources sometimes developed a lot quicker And standards to find useful predictable boundaries so Why can't we have one open banking API standard? Which would arguably what the banks should be our should be sort of advocating for well, there's a lot of reasons Regional historical differences in how the edums are created. There's literal language barriers that create different sort of branches and how people think in coding Software stacks might be different. There might be technology limitations of country when it comes to their how their banking system works There could be different privacy laws Service level agreements could be different depending on the country and they're like in Canada, for example There's laws that say banks have to Can't interact with certain vendors or can't outsource things to certain vendors The authentication journey might be different depending on the country Or even the bank the scope of the data and the intended functionality of that data might be different depending on the the government and the regulation for example Canada only is talking about doing data aggregation. It's not talking about right access or payments initiation Whereas in the UK and Europe, they do pay and pull or write and read access for data The monetization strategy may have developed differently So some people might want to be making money off of certain Premium data versus other governments might say no this has to be published openly thinking like credit rating scores, etc. And There could just be sort of differences in how people want to design things. So there's obviously You know a reason why we can't have one open banking standard, but that's not to say that we shouldn't be aiming for that and This is where I'm going to get briefly into open standards versus proprietary standards so I think everyone knows, you know, the main difference between an open standard and Proprietary standard, but there's these other organizations that are do these things called quasi open access or a quasi open standards And I would just say, you know, if you have an organization saying they're trying to introduce an open banking standard Make sure you're looking at the terms and conditions of that license I think a big red flag is if they make you sign an ELA EULA to actually access the standard is not open And there's going to be a bunch of issues around privacy and anti competitiveness in actually helping develop that standard We're having a bit of there's been a bit of debate in Canada around a standard that Some of the banks have adopted and I think they've done that from the perspective They wanted to take that sort of defensive strategic approach, but it's created Issues with the fintechs and the government and essentially it's kind of slowing down the adoption of open banking or at least the technical standards But why should we have one open banking open standard? It promotes interoperability. It's not a secret sauce thing This is again, this is like infrastructure. It's something it, you know, same thing as Finos They try and develop things that are non competitive So we don't need to have multiple standards if you go to any of the other presentations They're talking about standardizing on data frameworks, etc. An open sourcing internal code It it should be the same thing for open banking APIs It would eliminate the need for that cottage industry of fintech aggregators I mean, I think that would still exist from a consulting perspective, but it wouldn't exist from a You know, we have to use a third-party platform It would decrease overhead cost of all the organizations of having to develop to multiple standards or different banks API's It promotes the open data initiative goals the UN CATAD goals as well around data flows and open data sharing And arguably the large banks are going to benefit anyways with a demand expansion effects Second last slide. I believe These are some examples of different open banking tools that are actually open source That you might want to look at or think about I just learned this morning about the the Finos one The open reg tech initiative. I just found out about this morning so I haven't looked into it But that might be something where you know, maybe we have an open banking reg tech initiative under Finos it could potentially, you know help solve a lot of the Regulatory barriers that would exist for the adoption of open banking for not only the fintechs, but also the banks So yeah, final slide just strategic considerations Open access or I was calling open access like trying to change it to quasi open access I don't really have a better term for that if anyone does let me know It's not the same thing as having an open standard. Just be wary of that ELA's can restrict usage. It could create gatekeeping which leads to less independent contributions And that perceived lack of transparency might actually increase The need for government oversight, which would be the opposite effect of what the industry-led body is looking for The fair competition is more likely with open standards because again, everyone can see it You're not to sign or pay to actually help contribute to the standard transparency leads to That increased participation. I can go on a github site right now or get lab and help contribute I don't need to go through, you know motions and sign confidentiality agreements to work on closed standards Hopefully, you know, I've had that slide about all the differences But hopefully open standards would lead to less standards and you know single standard that Maybe even the globe. I'm being way too utopian, but maybe even the globe could adopt one day Another thing as I was showing governments are starting to like open source. You're seeing like the UK Canada Australia putting up policies saying that open source is sort of the framework that we should be adopting on the way forward and then Open banking is really it's about fintechs and banks and I think a lot of banks think about like the threat from Fintechs and losing that market share, but sometimes they forget that this is also about Apple and Google and and Microsoft and stuff coming in and actually Offering accounts or financial services and becoming that aggregator that would then create that disintermediation for The banks so they might be too focused on fintechs and not focused enough on the big tech companies And so what better reason than to have it open standards instead of having something like Google Create a standard that then we're all sort of beholden to So yeah, I think I have a couple minutes left for questions if there are any questions, but that's the end of my presentation Any questions or comments? It it's not going to shift the market share significantly I think it'll create that deep transformation in that there will be more access to data But I believe with the demand expansion effect that the large banks will essentially buy their way into the data analytics And and buy the fintechs that are doing well at that and then people will not be switching to other Like challenger banks. I mean show of hands. How many people actually use a challenger bank here out of curiosity One two three or that's half. Oh wait. No, okay. Well that disproved my theory actually I was talking to people last night and they're like no, I don't do challenger banks So I don't know maybe this might not be the best sample, but Yeah, so that it's I think it's a market share thing it won't change the market share But it would still it's still gonna sort of change for the dynamics of finance for sure Any other questions? I have two minutes left sir Yeah, I know what you're talking about. I Agree, I mean, I'm fully on board with the machine readable Sort of regulations I think you're seeing this in the digital ID space as well where they're sort of coming together as a group to discuss How digital ID is gonna roll out which is very much related to open banking. It's gonna run essentially on the same rails and then Yeah, I would say on other sort of new things like privacy and stuff You could essentially use something like github or something to sort of provide that transparent sort of advocacy There's a whole bunch of stuff going on with industrial policy and how we're trying to break up sort of the monopolies that Started forming after they did all the antitrust deregulation in the 1980s So we're kind of seeing the pendulum swing swing back, which is pretty neat Because we're actually doing it in a digitized way as well, which is increasing transparency So it's interesting times ahead, but yeah, I see it. There's tons of opportunities for sure So I think I'm at time. If you have any other questions, feel free to chat later I'll have a drink with you guys later. Thanks again for everyone attending