Market Insights

Benefits of Banking-as-a-Service (BaaS) | Nick Ogden, RTGS.global

In this video, Nick Ogden, Founder of RTGS.global, joined OBE panel to share his thoughts on the benefits of Banking-as-a-Service (BaaS), whether COVID-19 has boosted Open Banking payments and what the long-lasting changes will be, post-pandemic.

Video Summary

The idea of building ClearBank back in 2014 was to effectively create a new neutral player in the marketplace, a new clearing bank, which didn’t have the tech legacy of the incumbents. That was quite important because Nick and his team needed to move away and lose forever the term “batch” from the Oxford Concise Dictionary.

And so moving to an environment, being able to build a clearing Bank based upon a brand new, real-time, 24/7 by 365 tech stack, was really exciting for them. And each equally being laser-focused in relation to the customers that would bring into that environment, who are all regulated businesses.

Be those from a payments initiation provider, through to large building societies and banks,they work with all of them. But interestingly they have an API, but more importantly they match that API up to something called Banking-as-a-Service. Now, if a bank basically just gives someone an API, that’s great, then what is one going to do with it?

How one is going to take that and turn that into a business and develop services which are consumer compelling it’s very hard. If one is with an organisation that’s running Bank-as-a-Service, that moves slightly towards. With API one can do whatever he wants, because one consumes all of these services in real-time.

So if one has got a clever way that he want to build something, then he can fill his boots and do it. And it’s not a trade secret to say that today, Nick and his team got three and half million businesses and consumers in the UK consuming Open Banking, Bank-as-a- Service via APIs through ClearBank. Now they started that in 2017, so that’s in 3 years. Is that a slow growth? May be or may not be. But it is changing things.

It’s fascinating really to stand back and watch what’s happening as a result of a global pandemic. An interesting aside is that in 2007, before the global financial crisis, RBS which is a famous bank, the only thing that they had in their annual report as a risk was a global pandemic.

A number of people have been trying to find that report to find out, how do we get out of the current crisis that we’re in. The reaction to coronavirus, both from a government point of view and an economic point of view has been quite stark. The lockdown created a number of challenges.

Cash usage has dropped by 60%. Do we want to go back to a cash environment? Probably not, because where’s the cash been? We’ve been struggling for years to remove cash from the marketplace, what is going to replace that?” How does Open Banking support that cash?

But it’s not just the transactional element of cash. It’s how do we secure the transaction? How do we deliver identity verification credibility associated by it, from a transaction between buyers and sellers in a new way using the environment that we now live and operate in? Now in this pandemic everybody’s hoping that we’re going to come out of it shortly.

But that’s only going to accelerate the adoption of the digital technologies. So according to Nick, the benefit of this is that we’ve been forced through a global market education process which would have cost trillions, had we tried to get it done. And I think that the alert, bright businesses coming out of this, who will not be operating from offices, are those were that will be the winners at the end of this crisis.

In post-pandemic, customer service and communication will be the long-lasting changes for the Open Banking payments. Everybody’s going to realise that because of exposure to digital technologies, we can communicate in hugely different ways. And then that’s going to sort out those that have got a good customer service and good communication. Ant Financial is a very good example of that in China.

Video Timeline

0:00 – How have banks been participating in Open Banking?
2:23 – Has Covid-19 boosted Open Banking payments?
6:08 – Post Pandemic- What are long-lasting changes for Open Banking payments?

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