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Open Banking is London's last line of defence in the war for its Fintech crown

Published: Thursday June 27, 2019

Staying one step ahead of overseas innovation

With Brexit uncertainty apparently discouraging startups from setting up in London and Fintech markets flourishing across Europe and beyond, the UK must embrace Open Banking if it wants to retain its crown.

The mobile internet revolution has powered the explosive growth of the Fintech sector, and it’s transformed the way we live, work and do business.

For some time, London has been home to the world’s largest financial services sector. It follows that the city is naturally seen as the Fintech capital of the world. A combination of high investment and innovation-friendly regulation has incubated a huge number of Fintech start-ups, each keen to disrupt the market and become the Uber of the financial world.

All eyes on China

The next contender for the Fintech crown may well be outside Europe altogether. China is one of the fastest-growing Fintech markets on the global stage. It benefits from both a highly supportive regulatory environment and a booming e-commerce sector. For financial services and technology companies operating in the region, China is already an important hub.

Companies that harness data dominate KPMG’s recent ranking of the 50 leading Chinese Fintech companies

For example: Suanhua Credit uses big data to provide risk management services. It covers consumer finance, risk management and data analytics, and aims to provide solutions that cover the whole lending process. The ultimate goal is to reduce the rate of non-performing loans in the nation’s banking sector.

QuantGroup leverages big data to provide financial services for consumers and small enterprises placing orders on e-commerce sites. It provides a range of tailored and accessible credit services for consumers using WeChat and other third-party mobile applications. 99Bill also focuses on the convenience of mobile applications.

Its users access services like mobile payments, consumer loans, and saving services through a single account.

All may not be lost

All may not be lost for the UK. The Revised Payment Service Directive (PSD2) and Open Banking will completely remove banks’ monopoly on customer account data and payment services. Customers will be able to use third parties to manage their finances through open APIs.

Effectively, any company looking to capitalise on the banks’ existing data and infrastructure will be able to. That’s good news from a consumer point of view. The expected explosion in innovation may well leave traditional institutions languishing behind. As the Directive covers the whole of the EU, it could lead to a rise in cross-border banking. If London can capitalise on this, it could be just what’s needed to retain the crown.

Taking to the cloud to fight fraud

The rapid growth of the online credit industry in China led to a vast surge in fraud. With it came a rising tide of intelligent career criminals. Countless businesses and individuals across the nation fell victim to insider fraud, application fraud and identity theft. As much as 16% of refused applications were fraud related.

With crimes growing in both cost and complexity, it became increasingly clear to both credit businesses and those on the front line of fraud defence that something had to be done.

In response to market demand, GBG and Suanhua Credit joined forces to launch a powerful cloud-based fraud bureau.

This combines GBG CAFS’ extensive experience and powerful anti-fraud engine with Suanhua Credit’s own knowledge and credit data. It uses data from across the industry to identify fraud risk intelligently and efficiently.

The service is fully compliant with data protection laws, including SSL encryption, and will provide a powerful, long-term anti-fraud solution for the industry.

 


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