Episode 3: The Importance of Data Portability for Open Banking

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In this podcast episode, we discuss the open banking movement and the importance of open banking for Canada. More specifically, about data portability and its significance for open banking. This episode features an insightful conversation between Donna Galloway, Vice President of Marketing here at Portfolio+ and Michelle Beyo, Founder and CEO of FINAVATOR. FINAVATOR is an award-winning Fintech and payments consultancy which helps bridge the gaps between fintechs and traditional banks.

Transcript +

Dianne Cupples:

Hello. I’m Dianne Cupples, CEO of Portfolio+ and I’d like to welcome everyone to our new podcast episode. Recently, Donna Galloway, Vice President of Marketing for Portfolio+ had the opportunity to sit down with Michelle Beyo, Founder and CEO of FINAVATOR. FINAVATOR is an award-winning strategy firm focused on bridging the gap between fintechs and traditional banks. Today’s podcast focuses on their conversation about the Open Banking movement and the importance of open banking for Canada. I am really looking forward to this episode, so over to you, Donna and Michelle.

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Donna Galloway:

Hi, my name is Donna Galloway, and I oversee the branding and marketing for Portfolio+. Our banking software products and services create value for financial institutions, so in return, they can drive growth and outstanding customer experiences. Today I am joined by Michelle Beyo. Michelle is the CEO and Founder of FINAVATOR, an award-winning fintech and payments consultancy. Now I really need to do Michelle justice with her background and read this. Very impressive, Michelle, and very proudly read just now. Michelle is also a strategic advisor to fintechs, a Money 20/20 Rise Up alumni, a Global Council Member of Women in Payments, the Membership Chair at Canadian Prepaid Providers Organization, a Payment Advisor at National Crowdfunding and Fintech Association of Canada, and a Board Member at Open Banking Initiative Canada (OBIC). With over 20 years of extensive financial industry experience, Michelle started FINAVATOR. She’s passionate about payments and financial inclusion. Most recently, Michelle was named the “Top 30 Best CEOs of 2021” by The Silicon Valley Review and awarded “Most Influential Leader in FinTech Consulting – Canada” in 2020 by Corporate Vision. Wow, that was awesome, Michelle, to read and quite impressive. I would appreciate it if you’d give a few more minutes to talk about FINAVATOR, the company you founded, and perhaps your client base and the services you provide and such.

Michelle Beyo:

Thank you, Donna. It is such a pleasure to be here with Portfolio+ and you this morning to chat about open banking and FINAVATOR. I actually started the organization just almost three years ago; just before the pandemic. I started the organization because I spent twenty years in the corporate space, six years in telco, eight years in online shopping/ affiliate marketing, running Alaska, Lufthansa, Delta, United online shopping mall platforms. Then working with CIBC Bonus Rewards to extend out their restaurant, spa and golf course program, followed by helping conceptualize and launch Aeroplan’s first Shop Local back in 2014. Then I jumped into payments. With not a lot of knowledge of payments, but I jumped into an organization that is the largest prepaid organization globally. Working in their Canadian international head office, I had the ability to work with major organizations, facilitating their digital gift card and physical gift card infrastructure. So getting to work with Walmart, 7-Eleven, VISA, MasterCard, Uber – helping launch the Uber Card in Canada, getting to see the impact that prepaid had on bringing the underserved to services, especially with online infrastructure and actually got to launch WeChat for 7-Eleven back in 2017. Then I got quite nervous that my kids were going to end up with Asian Banking if the infrastructure and innovation in North America didn’t accelerate to try and compete with the innovation that was happening in Asia-Pacific. I took a leap of faith and jumped into the blockchain space at a company that was focused on digital ID and consent on blockchain for GDPR Compliance which led me to open banking. So being the Chief Client Officer at this blockchain company through a year that became a crypto winter, I was not only able to see the startup world, I was able to see what the impact and possibilities of blockchain were, as well as what data consent meant and ownership of data or digital ID. I realized that after winning Money 20/20 Rise Up, I had the passion and the want to create my own organization where I could take all of this back knowledge and help not just one company, but help many and truly trying to help organizations innovate faster. So FINAVATOR was created to help banks, credit unions, FinTechs, and corporations to work better together to drive innovation for consumers and SMEs (small and medium-sized enterprises). I’ve had the pleasure of doing that and growing my team over the last three years, largely working with one big Canadian bank, one large New York NASDAQ-listed bank, about 15 different fintechs, an array of global IT partners, as I’m trying to help drive that innovation in three different ways; either through product innovation, intelligent marketing, as well as strategic sales. With most of my clients, I do all three, but some need one aspect of our services to try and push them forward.

Donna Galloway: 

Wow. So many questions I could come up with, but we’re here about open banking today. So I’ll stick to subject. Amazing background. How did you end up involved with Open Banking Initiative Canada? Well, you have a lot on your plate and you’re moving forward your clients. Was it a need because your clients needed an open banking platform and to have that understanding? Where did it come from?

Michelle Beyo:

It’s quite interesting. I was actually at a conference with Eyal Sivan who’s also on the Board at OBIC. At the time he was still at CIBC. We were at a conference, and we ended up standing outside having a coffee and missing the rest of the conference, because we were just talking about the impact and possibilities of open banking based on what it had done for the UK, what it was starting to do for Australia. This was even before Brazil started to move forth. He joined the OBIC, introduced me to the Founder, Christian Clapton. In August of 2020, I was asked to join the board and Hanna from Wealthsimple who’s now the Chief Compliance Officer was also on the board. But it was seven men and two women. So, a nine-person board. Though it was my first Board, I asked Christian if he would be open to have a 50/50 Board initiative. He’s like, “I have two teenage daughters. I couldn’t think of a better initiative. Absolutely.” I said, “I’m happy to help find these women to equal out the board.” I did so. So I’m really excited that OBIC actually became a 50/50 board with C-level female representation as of December of 2021, one year after we took on the initiative. We didn’t lose the other board members. We just created an Advisory Committee and some of the other board members moved there. So for me, it was passion. I foresee the human data right as the path to the future to ensure not only ourselves, but our kids get to own their data. In the same similar situation, I guess I’ll give you a description of open banking in my sense is allowing for a consumer or a business to have the right to their data, to be able to port it where they need it, to save money, to understand their finances and to plan for the future, as well as to be able to revoke it once the service they received is either no longer needed or doesn’t have the same value. So, to give an example, I like to use telco. I used to be six years in telco, in 1999 and onwards. You couldn’t port your number. So, if you left one telco to another, you had to lose your identity and get a new number just because you wanted a better service or you wanted a cheaper service or you wanted better let’s say coverage. But when they created the ubiquitous ability to have a number swap and move from one telco to the other, you were able to take your identity – your phone number with you. You didn’t need to know how they did it or the infrastructure of how they did that, you just knew that you were allowed and that you could just go to a new telco, take that new service that was more competitive, more suited for you and have it transfer in 20 minutes without any challenge on your consent. That is the goal of not just open banking, but open telco and open finance and open data. You’re in charge to move that data to get that service and that intelligence of the information you’ve collected of your financial history to make sure that that new bank can give you the same product or better, because they can understand who you are.

Donna Galloway:

You make it sound very exciting and very innovative for Canada to hop on this wagon. There has been talks and there has been we’ll call it snail-paced movements in the industry. In amongst that there’s been talk about maybe we should go right from open banking now to open finance to open data as you alluded to earlier. If you could make it in one statement, why do Canadians need open data?

Michelle Beyo:

To access the services that they deserve. When you look at Australia, if I could bring you an example, in Australia, they’re a Commonwealth. They also have a set number of banks. They had a very stable infrastructure, but they made a choice to move as the first country in the world to open data and their date of their first open banking aspect of that was June of 2020. The pandemic happened in March, as we all well know, yet they didn’t miss their date. They didn’t use any excuses. They just ran forth to facilitate the date of starting open banking, followed by: they’re now on a mission to open finance, open telco and open energy and are leading the world in the concept and accessibility of a safe and secure API for data portability and giving the right to the actual citizen through regulation, and therefore have a very succinct movement of timelines and initiatives so that consumers can get access to competitive pricing, new competitors, fintechs being accredited so that they have access to the same pipe of safe data versus having to use something like screen scraping, which I think in Canada has moved somewhere between four million to possibly six million or more. As more and more Canadians are using fintechs, but they’re just unaware that when they’re signing in, they’re using a screen scraping service that is breaching their contract with their banks and leaving them open to challenges that they don’t need to have really. If they had a safe and secure way to share their data so that they could have a dashboard of their financial services or they could access… I think this is my favorite example as a business owner, if I’m using my accounting system and I have 12 different services from telco to credit cards to different banks that I need to feed into this accounting system, I don’t want to download my PDF of my statement to upload to get my information times 12, times 26, to just get the picture I need. I don’t have time. 98% of businesses in Canada are small to medium size businesses. If they’re wasting or spending dollars to facilitate that action, we are behind Australia, the UK and Brazil, because their business owners get to use an aggregation tool that is safe and secure and not putting them at breach of all their financial contracts.

Donna Galloway:

It really is a global movement. My team and I, when we banter about this subject, there’s been a debate that happens about banking as a service compared to open banking, both leveraging an API, one, which was a good description is one is an access to the banking tools. The other is access for consumers to their own data through an API set. So, we’ve bantered the fear of maybe open banking won’t happen because banking as a service is taking off and that’s what the fintechs are using to interact with institutions and such. But I don’t think that covers small businesses. I don’t think it covers open finance and thus open data. Do you have any observations on that and experience?

Michelle Beyo: 

Yeah, so I think it’s hitting a small subset of its opportunity. When you regulate or you implement a safe and secure way with a standardized API, you give access to more than just one company who’s built private contracts with the banks. What you’re doing is driving innovation. When you look at the UK and Canada from a VC perspective, they’re almost 50X the investment because there’s so many unicorns in fintechs that have emerged out of the UK because they were able to go down the accreditation path and facilitate access to this pipe. If we do this through a business-like banking as a service infrastructure, it’s only the tech players who’ve built private relationships with the banks to get access to their API one by one. A – it’s extremely costly. It’s not reusable for any other path. So, we’re keeping the innovation circle very small. Therefore, the long-term perspective of that as the world goes to open data is that the Canadian fintechs and Canadian organizations are pigeonholed to a small subset without potential global growth and our market doesn’t truly then get to understand what this open banking, open finance, open data infrastructure can enable. If we’re competing with countries who already have it, we will always be behind.

Donna Galloway: 

That makes sense. In your bio, you mentioned the under serviced, referred to as the under banked and such that you have a passion to help that along. I think if somebody coming to Canada that loses all of their valuable information, and if Canada were to get on this global network, if you will, of open banking, then that information could be used to qualify them, to let them get established better, to access that information to help them purchase a home sooner and get rent references and such. 

Michelle Beyo:

Yeah, I think that there’s a great example of even just Americans crossing the border with very high credit score, not being able to buy a car without buying it for cash because they have no credit. So, I think when you look at that, keeping it to banking as a service keeps it small and it keeps it to the same subset of services. But when you open the pipe to give a fintech to have to be accredited, to have to have all of these check marks, you’re making it easier for the banks to want to partner with them because they don’t have to do their own due diligence to the same degree, because everybody will lift up the fintechs within the ecosystem. Some fintechs are just focused on one subset of the underserved and that’s their business model. It will never make financial sense for a bank to just focus on that subset. So, by not making it accessible to all who can facilitate the accreditation, you’re still leaving out the underserved in pockets that fintechs are serving and still can’t get access to the core pipes.

Donna Galloway: 

Yeah, it makes sense. I know you’ve been instrumental through the OBIC, Open Banking Initiative Canada, moving along knowledge and information and education of open banking. Recently, there’s been a round table initiative that has taken off. Would you mind providing some more insights into what that was about and the catalyst as to why it’s happening?

Michelle Beyo: 

Yeah, thank you. Well, Donna, honestly, when we started January, we looked back at all the insights and education we were able to facilitate as a non-for-profit organization with our mission at OBIC to help the underserved, to help the consumer, and to help SMEs and the entire ecosystem work together for open banking, open finance to be a force of good for the ecosystem. We’ve done a 99-page manifesto on a force of good with global data that is available for free on the OBIC Canada website. We’ve also done infographs and articles on the consultation paper coming out with the roadmap on August 4th from the Finance Minister, and even Biden’s Executive Order that came out in July before we had our consultation paper. So just trying to help the ecosystem understand open banking in small, bite-sized forms to really try and move the ecosystem forward. As we looked at having the fact that we have now a potential roadmap, a consultation paper in January, what we still didn’t have yet was the open banking lead, an accreditation framework or the data privacy laws to facilitate data portability. It was in one of our weekly chats as OBIC members in early January, where we discussed what are we missing to actually move this forward at a fast and secure pace. What was missing is a Bill C-11, some type of regulation that would allow for data sharing to happen. So, the catalyst for that round table was really to discuss Bill C-11, why it had not moved forward, what parts of it were crucial to help open banking and open data. We’re able to thankfully have Senator Deacon who I’ve done a podcast series with or a YouTube series with ten different episodes focused on the UK’s advantages over Canada because they have open banking. So, he was able to join us as well as Andrew Moor from Equitable Bank, and our ecosystem like yourselves as well as many other members from EPAM to Axway to others.  We just got League Data joining us this week. So, we’re trying to get to credit unions as well as to ecosystem players, tech players, banks, and bring them all together to really talk about data portability. Thankfully, we had Cindy Zhang from Borden Ladner Gervais LLP who’s an Advisor to OBIC and a lawyer for the financial service sector, join us from a regulatory perspective and helped lead through the discussion of the parts of Bill C-11 that were very crucial. What we then did after that first kickoff meeting was send a letter to the Finance Minister, asking that data portability be considered to be added to the bill, the Budget Implementation Act of 2022 to allow for the legal aspects of data portability to be facilitated as a first step to get us closer to open banking. We’re happy to share that it was received. We were thanked for the idea. I don’t know if it’s going to be implemented, but I think the ecosystem is trying to work together. So, we continue to have these monthly meetings. We’re happy to have anybody who’s not a member to join us to be a part of this discussion so that we could refine the comments and try and give this to thankfully our new Canadian-appointed open banking lead Abraham Tachjian who was appointed in mid-March to hopefully take as an industry to move us there faster because other markets in the world like Australia, Brazil and the UK had mandates with regulation that forced out specific dates. In Canada, we are still on this market-led perspective. So, if we’re going to be market-led, we very much need to have a cohesive voice that is trying to move all the pieces across the line and get all of the comments and insights so that we can make a Canadian open banking infrastructure for all.

Donna Galloway:

Yeah. You say market-led, absolutely agree. We need a regulatory body in there to help define how open banking should go forward. But there are a lot of people that have gone on that march regardless of the regulatory guidelines, if you will. How far along do you think Canada is market-driven along the open banking path? So, when we do get it in place, then that’s a further question for you is when. But how do you see the industry being able to react to perhaps as regulatory standards being written that we’re not aware of, or do you think it will all have to come together to get to where we need to be globally?

Michelle Beyo:

Yeah. I can say I’m quite jealous of Australia, Brazil, and the UK. I imagine them often, not all of it was right, but we can learn from all three markets, which are all quite different yet had many successes. I guess I’m quite excited to learn from all those successes and how do we make our infrastructure and our path very clear, intentional with time boxes. Because when you look at the UK moving forth in 2017 being a first mover, they didn’t get it all right. But what they did have the opportunity to do is move forward, learn, and continue to iterate and had very incredible use cases come out of it which we can get into. When you look at Australia, being a market that hasn’t been known for fintech or innovation, maybe stability, but definitely not for innovation, and then take a path to move forth in regulation to have an open data new world vision, and then facilitate it on path, on time with mass oversight. Then you look at Brazil who in the middle of COVID decided from the central bank and government to move forth with open banking and then facilitated it in 12 months. Not multiple. There was a lot of discussion. There was a lot of hard work, but everyone came to the table to facilitate an ecosystem for the people, for their businesses and for access. Brazil is not known for execution, but they came together as an ecosystem and now they’re one of the world-leading open banking infrastructures, moving towards open finance. So, I think there’s a lot to learn. I’m excited to hear the path and how we’re going to get there, but there are pieces we still need. We still need that data portability like we spoke about. We still need an accreditation framework which is the next thing OBIC is going to draft. Nobody has asked us to draft this document, but we’re going to work with CIO council, our members, and Global Insights to draft something to hopefully get us there faster. Because I think all these pieces, if we’re going to be market-led, we have to lead and we have to find time and voices to ensure that we cover all aspects so that we do have an ecosystem that is for many, instead of a few.

Donna Galloway:

It sounds like there is I’m going to say, a bit of a pot of gold at the end of this open banking journey, because like you said, Brazil jumping on it and turning around so quickly, I don’t know, some data varies, but 300 to 500 fintechs that are on the open banking network within the UK. We’ve witnessed in Canada, fintechs attempting to come in and parking it until we are better ready for them and such. Do you think there is going to be a lot of job creation, a lot of economy cultivated out of this happening, this initiative?

Michelle Beyo:

Yeah, definitely. I think when you look at the UK or Brazil, the amount of dollars of investment of new companies, of added business models, of additional services, and even when you look at the UK, because I’ve done a lot of research on it, the CMA 9 have not fallen off the top 100 list. Many of them have moved up over the five years because of their fintech partnerships or investments or new business models. So, I think there’s quite a bit of advantages for the banks. A – if we just talk about KYC Compliance and AML, many banks have to do that onboarding process seven times, right? Because they have seven different products in seven different departments. But they could use open banking internally for their own clients without having to have the cost of holding seven data records for that same customer. So, there’s advantages that can be looked to, to find out ways on how banks utilize open banking to be more efficient internally and more innovative externally. As well as the fact that I mentioned, if fintechs are accredited, it can speed up the bank’s partnerships with the fintechs to get the services their customers are looking for in a shorter period of time versus an 18-month roadmap. They might have missed the mark, but if they have accredited fintech they could partner with, they can get to market faster. So, I think there’s, in my opinion, advantages to all. One of the use cases I enjoy the most is in the UK. They’re at five million users of both in banking now, but I was speaking to Simon Lyons from Pay.UK, who used to be at OBIE (Open Banking Implementation Entity), and he was the one who was working directly with the government to figure out how they can use open banking for tax payments. They were able to initiate by just adding a box on their tax payment infrastructure to say pay directly or “Pay Direct” is what they called it, and then consumers could. It was just called new pay direct option. They clicked on it. It gave them open banking accessibility to facilitate that transaction and that transaction not being lost, being marked directly to their tax number. Thankfully, I do not work in taxes, but what I have heard is that there is, like any business, if you are taking in mass amount of payments, there are going to be lost payments that need to then be investigated. What this did was reduced those amounts of lost payments and got the money in faster, more efficiently, and the pickup rate was incredible. I’m looking forward to doing a case study so that we can share some of this data, but there’s mass upside for government organizations through open banking as well.

Donna Galloway: 

Well, that’s a wise use case too. Let Canada hear, let the government hear that they can get their tax money much easier and more efficient. Do you have an innovative, a very innovative type of use case that you want to talk about today that you can think of?

Michelle Beyo: 

I think the biggest thing, A, is if we could help the government get their taxes paid faster, B, if our SMEs could get their accounting to be seamless in the sense of how they collect their data. Then from a consumer standpoint, a quote that OBIC Founder Christian Clapton quotes often, from 2019, so before the pandemic, most Canadians are $200 away from insolvency. I can’t imagine what their number must be after the pandemic or while we still are coming out of the pandemic. But if they could have better visibility or have suggestions to financial services that are more suited to them to help them save or understand how to save for the future, then it’s largely to ensure Canadians can have better options, more competition, as well as services or visibility in a way that will allow them to plan for their future.

Donna Galloway:

Michelle, you’ve been so knowledgeable in this area. I’d love the story about you wanting to have a 50/50 Board to make sure that women are represented properly in the financial industry, let alone the technical industry. I hope you keep that going for daughters all around the world and the next generation, as they say. If you had a crystal ball, do you have a when for open banking for Canada?

Michelle Beyo:

I’m a glass half full kind of person. So, my hope is that because Canadians are innovative, because our ecosystem knows how to work together, we did implement the number portability within our telco infrastructure, we did implement and we’re one of the first to implement EMV cards for tap back in 2015. So, I’m hopeful that the ecosystem comes together and facilitates open banking within 2023 to start to move away from screen scraping and give Canadians and business owners an option to get access to their data, and also the biggest thing, Donna, is to be able to revoke their data when they no longer need that service. So I am hopeful that with Abraham Tachjian and organizations like OBIC and organizations like Portfolio+ , League Data, EPAM and all of these, Axway, and others that are coming together to try and work on their own time to drive this forth, that we will get to an opportunity for Canadians and our ecosystem to get in more VC dollars, to inspire more fintechs and to have our banks flourish through innovation and through an access point that is secure and safe for all of us to facilitate financial services.

Donna Galloway:

Awesome. Thank you so much, Michelle. Appreciate you being here today.

Michelle Beyo:

Thank you so much, Donna.

Dianne:

What a wonderful and insightful conversation, ladies. Thank you, Michelle, for spending time with Donna on this important topic, to you, our audience for listening to this podcast episode.  For more information, please visit our website at portfolioplus.com/podcast . If you have any feedback, please feel free to tweet to us at portfolioplus19 or like and share on LinkedIn. You can subscribe to our podcast series wherever you listen to your podcasts and you can add yourself to our mailing list, and we’ll notify you when our next podcast episode is available. Until next time, all the best from the team here at Portfolio+. 

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