Unlocking the Potential of Open Banking with Gosia Furmanik

Revolutionize your business's financial transactions with the insights from Gosia Furmanik, founder of fena, as she unveils the power of open banking. In our engaging discussion, Gosia demystifies the concept that's causing waves in the financial sector, sharing how it's reshaping the playing field for small and medium businesses against the giants Visa and MasterCard

Simon and Gosia discuss how cost efficiency, data-rich decision-making, and bolstered security measures are just the tip of the iceberg when it comes to the perks of embracing this cutting-edge tech 

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Transcript

Speaker 1: 0:06

Welcome to the Productivity Podcast. Today, I'm delighted to be joined by Goyshir Fermanik from Fene. Hi, how are you?

Speaker 2: 0:14

I'm very well. How are you doing?

Speaker 1: 0:16

Good, good. So today's going to be an interesting one because I feel like I'm going to learn a lot today as well. So we're going to be talking about open banking, but before we get into the detail to find out the kind of the what and the how and the benefits, do you want to give us a bit of introduction about yourself, how you became the co-founder of Fene and what Fene does?

Speaker 2: 0:38

Yeah, of course. Yeah, thank you very much for hosting us here in the podcast. So my name is Goyshir and I started a business called Fene back in 2019, at the end of 2019. And the reason why I joined Fene and why I decided to dedicate my professional life into open banking is we felt that open banking is such a great concept when it comes to businesses, mostly because it helps businesses to optimize the cost structure but also access data to inform the business decision, and it's quite interesting from the retail perspective and in terms of my kind of a little bit about my background.

Speaker 2: 1:28

So my background is primarily in technology, mostly in marketing and products. So before Fene, I was head of marketing for a company called Riala and Riala was commercial property search engine that got acquired by a larger US company called Costa, and before that I worked for an events kind of advertising and technology events company called CanLions. So that's kind of my professional background and in terms of Fene. So Fene we kind of started the journey to mostly help small and medium businesses to compete with a larger enterprises on the technological level utilizing open banking. And that's kind of what drives us in what our mission is to bring the open banking technology to more of a smaller businesses to let them compete with the larger businesses.

Speaker 1: 2:21

Excellent. So a wide journey, lots of tech involved in kind of your previous lives. So for the uneducated and I'll include myself in that do you want to tell us in really simple terms what open banking is, just so that we start with everybody on the same level of understanding?

Speaker 2: 2:41

Yeah, definitely so. Open banking is a kind of UK interpretation of a wider legislation called PSD2. And that's payment system directive two, and that legislation was introduced in the UK and wider in the EU mostly because our basically legislators wanted to bring more kind of competition in terms of payments and financial services in Europe to compete with the US companies, aka Visa and MasterCard, on the payments rail system. So that's one part of it and it's effectively a framework that allows regulated technology businesses to build a connection with banks across UK and Europe to access payments rails on one side and on the other side to have access to data that is effectively gathered by banks so the transactional data, the individual bank account holder data and business bank account holder data and that data can be then made available via an easy interface built by technology businesses, used by both consumer and other businesses effectively.

Speaker 1: 3:59

Got it. So, if I play that back to you for just to check my understanding, it's a way of de-risking the market in terms of the reliance on Visa and MasterCard, so to enable others, with the use of technology, to have a standard way of taking payment, making that transaction and then holding all the records around. Is that the fair assumption?

Speaker 2: 4:23

I think that's, that's the assumption and that's just part of it, but also ability to we gather so much data as well from our transactions on the bank account and that data can be made available for technology businesses but other other businesses as well for technology To use for things like, for example, loyalty programs. Analyzing the transactional data is onboarding of the businesses as well. So that's one part of it, plus the payment side. So utilizing our great banking system and, in the UK, faster payment network to make faster and quick and cheaper payments between businesses and individuals, individuals and individuals and both businesses and businesses to make sure that we can get paid easier and quicker and more cost effective way effectively.

Speaker 1: 5:10

Okay, you touched on some of the benefits there, so it can potentially be quicker, and you said cheaper as well. How does that work?

Speaker 2: 5:17

Yeah, mostly because it utilizes just effectively utilizes bank to bank transfer so it cuts off within the normal card processing. It takes about five or six different parties involved in. Each party takes a fee obviously of the transaction to make sure that they can provide a service. In that case you effectively transfer money between one bank and two another bank account and use a third party provided like To facilitate that transaction so effectively, cut a lot of middleman and because of having that more simple structure we can simplify the cost and offer a cheaper transaction. But versus car transactions.

Speaker 1: 6:00

Is it? Certainly for retail environment. It, I suppose it's for me. There's that annoyance if you buy something they take the money straight away, but then if you refund something it can take. You know, some people quote seven to ten. They so should theoretically speed up some of that process, or is just? Is that just their internal process?

Speaker 2: 6:23

no, it actually. It's a clear clearing of the payment body, as it can speed up that process, mostly because, in our case, we build a reverse bank transfers effectively uses the same rails in a faster payment network, so the refund can be literally over in seconds.

Speaker 1: 6:41

Potentially as well benefit to a consumer yeah, any other benefits that you're kind of discussing with with clients we've not talked about.

Speaker 2: 6:50

Yeah, definitely. It's also fraud prevention, mostly because it doesn't use any kind of card details or any kind of details. It's all using API is effectively. So I am from the consumer perspective. They require strong authentication to authenticate a transaction and from the retailer perspective, they don't hold any details like car details. It's all being token eyes and it's all using API, so there is no way of, for example, looking at the car details data. So that prevents fraud and also Helps, basically, or retailers to make sure that the compliant data is more secure.

Speaker 1: 7:30

And I can still use my credit card or bank card to make the payment. It's just then processed in a different way?

Speaker 2: 7:36

No, it's not. So it's not using your own online banking or mobile banking.

Speaker 1: 7:42

Yeah, so we cut out the card, in effect, and we're dealing straight from bank to bank, yeah, to bank. Got it, got it Good. And that whole security thing is clearly a big upside because of GDPR. And we've seen over the news in the last I don't know four or five years of people leaving laptops on tube trains with personal data in, and clearly there's that suspicion around who's listening to us and which countries might be trying to hack data or influence elections. So it's a big topic, isn't it? That are people, rightly so, are very concerned from a personal data point of view, but then from a corporate point of view, that whole data governance piece.

Speaker 2: 8:25

Yeah, so the most transaction have a bank level security because it requires bank level authentication to make a transfer between one bank account to another.

Speaker 1: 8:35

Excellent and there's a benefit and you might need to explain this to me of de-risking our reliance on the American banking system. Is that correct?

Speaker 2: 8:45

Yeah, so it's more less of a banking system, more of a payment arrails. So card payment arrails are kind of the main two providers, which is effective to Visa and Mastercard. And there are American companies and if someone else is in the White House and they decided that they want to impose some sort of restriction on those companies selling abroad that might affect other countries. So as a response, we need to have an alternative way of getting paid and so, using homegrown rails like Faster Payment Network in the UK or SEPA in Europe, we can kind of make our system more resilient and more kind of reliance on our own infrastructure, local infrastructure instead of foreign infrastructure.

Speaker 1: 9:36

And again from a and I'm sure visa, mastercard spend a lot of money and have a lot of security around their processes, but they must be prime targets again for kind of cyber attacks, ransomware and all those kind of things.

Speaker 2: 9:52

Yeah, that's correct as well. Plus here, obviously, because we using effectively bank transfer, which banks are probably one of the most regulated entities from the financial services, so they security is top notch and on this also, it requires strong authentication on the from the customer perspective. So they need to approve that specific transaction in order to to release money from the bank account to the whoever they pay, their business or other individuals.

Speaker 1: 10:23

So I get all the benefits, understand what it is. So we've kind of lost the car. We're dealing directly with bank to bank. There's not really any data that's being moved, that if it was leaked as we're going through the API as you could find out personal information, which is great. If somebody says get all that sound brilliant, how do they go around implementing open banking?

Speaker 2: 10:45

I think there is the providers like ourselves that make open banking API is available as a of the shelf products or using our as they case or API. We also offer plugins for various, for example, e-commerce services like who commerce, shopify and similar. So so there's a various way of going about it either just simple in our case, is registration on our portal and just trying and see if they can generate payment links using our dashboard or if they want to implement it on the, for example, e-commerce website and they have a bespoke website, they can use, generate API keys and integrate our solution using API, so, as they case, and if they use, for example, use a Shopify, they can use our application in some way, so it and at open banking payments as one of the options in the checkout and from a consumer point of view, that I'm going to go and shop in.

Speaker 1: 11:42

I used to work at boots, so let's use boots. An example I go into shopping boots. I go to the self checkout. How does the journey change for me then from a normal get my card out, my wallet. What happens then?

Speaker 2: 11:56

So, for example, on the let's say it's a in person payment. So what they can do, we can display a QR code on the either a tablet or e-pros, whatever they're using, and a consumer can just scan that QR code and select the bank they want to pay with. So, for example, if they want to pay with their, let's say, not was bank account, not was mobile, banking would open on their mobile and has basically pre filled transaction details. So let's say they paying 25 pounds to company called boots, they just approve it and they just get redirected to confirmation page that the payment has been made and on the screen we can display then the payment has been made and it's a successful transaction.

Speaker 1: 12:39

Have you? This reminds me of a journey. So I think HMRC, so the tax people, I think they use something similar because I've done this when we've been paying our kind of monthly tax bills. You get a QR code on the screen, you scan. It opens our HSBC App on my phone. I then do the face ID to authenticate, confirm the payment. It then the screen refreshes and it says payment complete and it sends me an email to say it's done.

Speaker 2: 13:08

Yeah, so HMRC uses actually open banking and they were one of the first adopters of open banking technology here in the UK on the kind of largest scale.

Speaker 1: 13:18

Got it, so it's good enough for HMRC, I suppose is the strap line to that, which is quite a strong endorsement.

Speaker 2: 13:25

Yeah, that's correct, yeah.

Speaker 1: 13:27

Good, so implementing is relatively easy. Have you got any other kind of user case examples or case studies you can share with us, just so people can start to get a feel of how it works?

Speaker 2: 13:39

Yeah, definitely so, I think, because a lot of we. Obviously it's not like a miracle solution. It's a solution especially good for businesses that actually have a quite high value transaction, because that's where they can see the benefits of open banking straight away on the cost side. So one of the good examples, for example, furniture companies they often have. They take, let's say, orders in store but the furniture is being delivered, let's say, two or three or five weeks later, and that is a very good example of use case for open banking. So they can generate the order.

Speaker 2: 14:17

A customer can pay in store by either scanning a QR code, they can get the e-link sent to the e-mail address with order confirmation, they click on the link, complete the transaction, the payments received straight away by the retailer and then the order is being basically sent to wherever they need to fulfill their order for the furniture side. And that is actually a very good use case because the transactions tend to be more high value. The saving is significant. It will be about 80% cheaper than card payments. So that is a significant benefit to every tailor and customer had quite seamless experience on paying for quite high value product.

Speaker 1: 14:56

And that so high value is good because we're saving proportionally on the fee, but there must exactly there must also be a benefit if you have lots of small transactions just because of the volume that's.

Speaker 2: 15:09

That's true as well. So lots smaller transactions can be done quite quickly and this definitely helps with getting money faster on the bank account instead of waiting I don't know five, seven days for the card processor to release the funds. So it can helps with the cash flow. If there is a high volume of transactions, they need to be received quite quickly on a bank account.

Speaker 1: 15:30

Yeah, which can make a massive difference to some companies because of that, there's always that belief that somewhere in the middle of taking the payment and getting the money and then the reverse logistics of issuing the refund and the customer getting the money back, somebody in the middle is holding a lot of money.

Speaker 2: 15:47

Yeah, for quite a few days basically.

Speaker 1: 15:49

Yeah with it. In an environment where there's high interest rates, you can make a lot of money off holding money for a few days, if that makes sense.

Speaker 2: 15:58

Yeah, that does. Yeah, especially now if you can get five, six percent on on the deposits.

Speaker 1: 16:04

Excellent, good. So if we've got people listening to this and they're thinking, okay, that sounds really interesting and we know that people are looking for cost efficiencies. But you know, I'd class this as a payment efficiency, from a speed of getting the money into your business, a speed of getting money back out to customers on refunds, which I think is really important, but but also that security, the data protection piece and the whole cash flow. If people want to get in touch with you and find out more about how Fener could help, what? Where's the best way for them to do that?

Speaker 2: 16:41

I think the best way is to start on our website, which is fenercaco, and then there is a contact page that you can contact us via the website. You can also connect with me directly, and my email address is g-o-s-i-a at fenerco, and feel free to connect with me on LinkedIn. It's just my name and surname, so it's Gosha Formanik on LinkedIn.

Speaker 1: 17:04

Perfect and we'll put some of those details on the show notes so people can click through and find you on on LinkedIn. So it sounds like we're kind of at the cusp of this. You know we talked about HMRC using it, which is clearly that that big endorsement, but it sounds like potentially this could revolutionise some of that cash flow and data to data security over the next few years, plus also de-risking us from what what doesn't, doesn't happen in in America, which feels relatively stable, but, as we've seen before, their presidents change and we agree or disagree with who they've got in. Plus there's, you know, various conflicts around the world that that they're involved in as well, which you know we potentially are. But it does seem that Visa, mastercard of maybe a monopoly is not the right word, but had a very low level of competition over the years and this might start to change the game.

Speaker 2: 18:03

Yeah, it helps us to utilize our own homegrown infrastructure, which is great. It's also what's quite interesting which I wanted to add is what's coming for open banking with which are effectively variable recurring payments which could potentially replace two types of payments direct debit and card on file and that is another exciting development in the kind of world of open banking so effectively that's coming very soon. I know there was a consultation by the regulator here and they quite keen to start pushing that solution to the effectively real world. So we're looking forward to implementing variable recurring payments for commercial use cases.

Speaker 1: 18:52

Yeah, and it's interesting that card on file you mentioned. I think some banks have a limit of nine organizations you can have on file and I think what that means is if you've got a recurring payment with Netflix, disney plus Amazon, whatever, whatever, once you reach nine people retailers, whatever you can't then add anymore. So you can't then add that card to Apple wallet because you've already got nine vendors on file. So again, opens up a wider range of opportunities for people.

Speaker 2: 19:23

Yeah, and why the range of opportunities? Plus again, reduced cost. Because they'll be a very competitive price compared to the card payments, recurring card payments for subscriptions, for instance.

Speaker 1: 19:37

Excellent. Well, I've found this fascinating when you, we kind of talked off off air about how this episode had work and what we talk, talk about. I find it interesting then, but fascinating, to discuss Something I hadn't realized I'd used until we talk today. So, again, learning all the time. But, yeah, let's, let's stay connected. Again, if you're listening to the podcast and you find this interesting, we'll put the details in the show notes. So please reach out to Goyshia and have a chat and we'll keep a close eye on there and how this technology progresses. But finally, kind of thank you for your time. I know you're busy and appreciate you taking the time out to chat.

Speaker 2: 20:16

Cheers, thank you very much for having me.

Speaker 1: 20:20

You're welcome.