Feb 19, 2021

Monzo and TrueLayer use open banking to protect customers

Monzo
TrueLayer
openbanking
gambling
William Girling
2 min
Monzo and TrueLayer use open banking to protect customers
Digital bank Monzo and open finance tech expert TrueLayer have partnered to create a new ‘gambling block’ for vulnerable customers...

Monzo first instigated a ‘block’ feature for its app in 2018, apparently to meet the demand of customers who wished to tackle issues related to gambling addiction.

Subsequently, 275,000 of its five million users have reportedly activated the function and less than 10% have deactivated it. However, the evolution of payment methods for online gambling using open finance tools has meant that prior protections are no longer robust enough. Monzo’s collaboration with TrueLayer is an attempt to redress the balance.

Protecting vulnerable customers

The previous incarnation of Monzo’s protection would block payments to particular ‘merchant codes’ (assigned on card platforms like Mastercard or Visa) linked to gambling companies. 

This still works well, however new methods for payment, such as those powered by open banking, bypass the protection by dispensing with a card platform intermediary and allowing a direct consumer-bank authorisation. 

Through an enhanced API, TrueLayer can overcome this issue by notifying Monzo any time a user with gambling restrictions on their account attempts to pay with open banking. TrueLayer described the solution as “relatively straightforward”, yet with the potential to have a significant impact in helping those who require support. 

Making gambling more responsible

Following a statement from Monzo’s new CEO TS Anil earlier this week, it appears that the leading digital-only bank is taking a firm stance on making gambling a more managed activity.

“We believe the government should take the opportunity afforded by the [2005] Gambling Act review to make sure every consumer in the UK can access these blocks, regardless of who they bank with.

“These tools are simple to build, proven to work, and will help protect hundreds of thousands of people.”

According to Statista the gross gambling yield in the UK last year was roughly £14bn, with 31% of the population gambling on a weekly basis. As such, talks about how best to protect consumers in an age where digital payments make the activity easily accessible are ongoing.

TrueLayer concluded its announcement of the Monzo partnership with a positive affirmation, “By enabling the right types of protections for all players, gambling can remain a purely social activity, rather than one with life-altering negative effects.” 

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Jun 17, 2021

Zafin: Banking is now in the era of the tech ecosystem

Zafin
Banking
Technology
Digital
3 min
FinTech Magazine holds a Q&A session with John Smith, EVP Ecosystem at Zafin, on the evolution of banking and its future as an aspect of tech ecosystems

The development of tech ecosystems is placing the future of post-COVID banking in jeopardy. At a time when Big Tech can replicate the functions of traditional financial institutions, what can banks do to retain a grip on the market?

John Smith, EVP Ecosystem at Zafin, has a few ideas. A SaaS cloud-native product and pricing platform for financial institutions, Zafin is preparing the next generation of banks to cope with this precise challenge.

Smith is responsible for the strategic and tactical management of the company’s ecosystem, including the creation of new business models to support growth and differentiation. We asked him four questions:  

Q. Have the events of the pandemic caused an irreversible shift in the digitalisation of banks? If so, is COVID the sole cause or are there other factors?

It’s a great question and one that I am asked a lot. Without a doubt, the COVID-19 pandemic has driven a significant shift in the acceleration of digital. In fact, I’ve seen some estimates show there to have been as much as four to six years of digital adoption growth since the initial lockdown started. 

While the pandemic may be the primary reason for this growth, two other drivers include fintech disruption and the high costs of operating a traditional retail bank. Both of these factors have caught the attention of banking executives as they set their minds on accelerating digital transformation with a focus on high return, low risk. 

Q. Some commentators believe banks must learn from Big Tech in order to survive. Do you agree? Please expand. 

I agree completely; we’re living in the era of the ‘ecosystem’. All the seismic shifts we’re seeing in technology, be it aggregation, embedded finance, DeFi or hyper-personalisation are all enabled by the foundation of an ecosystem.  

When financial institutions work with a strategic partner like Zafin, which has made the strategic investments in a best-in-class ecosystem, they’re able to capitalise on opportunities more quickly and safely, and will be better positioned for growth now and at the other side of the pandemic. 

Q. What are currently the obstacles to adopting Open Banking? Is it more likely to 'take off' in some regions rather than others?

I would argue that Open Banking has been in the US for some time and will only continue to grow there. By definition, Open Banking is about the secure sharing of financial information that customers are aware of and have authorised. Under that definition, we’re seeing aspects of this well underway even though its full potential remains to be seen.

Third-Party Providers are a natural outcome of Open Banking, whereby they can create propositions beyond what a bank normally does to enable banking functions such as payments, borrowing, saving and so on. Once again, some of these are already present through industry-led initiatives, whereas regions such as the EU have taken the pathway of regulation such as PSD2.  

The industry-led initiatives we’ve seen in the US have also had the added advantage of guard-rails that regulatory bodies like FFIEC and CFPB provide. There are also other technology-led initiatives such as API definitions that are set out through the FS-ISAC. 

I would argue the future of Open Banking in North America will be through the natural evolution of the guidelines and API definitions that have been published, as well as the natural progression of industry initiatives. 

Q. Are there any other bank tech trends you'd like to discuss? 

Coreless banking. Zafin has been pioneering some of the work around externalising functions out of the legacy core to drive a more ‘fintech nimble’ bank, while not having to deliver a ‘heart and lungs’ core bank replacement. 

Real life examples of this include moving some of the core functions of a banking system, such as product and pricing to a platform like Zafin. Origination, onboarding, KYC, risk, and compliance are all other examples of externalising banking functions for added agility.

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