From opening banking to embedded finance
Nigel Verdon, co-founder and CEO of Railsbank, has highlighted how the financial services industry is being revitalised as open banking has quickly developed into embedded finance.
As one of the main keynote speakers, Nigel opened the second day of the virtual Apidays Live London conference with a talk entitled "Revitalising the core with Banking-as-a-Service."
Nigel began by flagging the huge momentum that has seen the opening up of the banking and finance world to APIs. And it is the APIs that have driven the open banking journey.
He went on to tell the large virtual audience that open banking is only really about two core services, account data and payment initiation. Whereas embedded finance is about so much more: open banking together with, for example, issuing cards and accounts, currency conversion, multiple payment schemes and collecting money.
The backdrop is that technology has totally democratised many industries. Take the fact that anyone can become a taxi driver thanks to Uber, Lyft and Bolt; and that anyone can create movies, thanks to YouTube and Vimeo.
And that any business, or brand, can become a fintech and that finance can be embedded with just five lines of code. For Nigel and his team, they are driven by the thought of empowering any business to embed financial services directly into their own customer experience and customer journeys.
What’s more, that APIs are the building blocks that bring to life any financial use-case that a business might wish to embed into their customer experience.
And that with any use-case, Railsbank supports it 24 hours a day, seven days a week, a utility that manages and operates the complexity and risk of running financial services. This allows a customer of Railsbank to focus on their product, their UX and their customers.
Nigel then moved on to how Railsbank built its system from the ground up, which meant they could decouple the ledger from the product. Nigel explained that with most systems, there are numerous ledgers which have to be reconciled with each other. Whereas in reality, a ledger is much the same for every single product. It has a debit and credit functionality, and a running balance.
And to that single ledger you can wire things up, such as different types of debits and credits, and that’s what Railsbank calls rails, those bits and pieces you add, such as Banking-as-a-Service, Cards-as-a-Service, Compliance-as-a-Service and Payments-as-a-Service. These bolt onto the Core Railsbank Operating System which is linked to legacy systems and provides ledgering for any fungible asset and transaction processing.
Nigel ended on the question of where embedded finance will be in ten years.
He takes his cue from the data centres and CRM players, such as AWS, Alibaba Cloud and SalesForce, who are utilities and sit in the world stack.
He suggests that companies such as Mastercard and VISA, and Railsbank itself, as it is currently the only truly global BaaS currently operating today, will eventually sit in the stack above such infrastructure companies, forming a finance layer which offers all the plumbing necessary to offer consumers and businesses a complete financial services proposition.
Nigel finished his session with a number of questions from the virtual audience.
Apidays also congratulated Nigel on winning the speaker’s competition. He was the most successful speaker within all of the 2020 events, driving a significant number of people to the website and attracting a large number of registered participants.
Apidays London, which took place on the 27 and 28 October, 2020, looked at the road to embedded finance, banking and insurance, attracting over 1600 participants.
Other speakers included Hakan Eroglu, Global Open Banking Lead & MEA Innovation Consulting Lead Principal at Mastercard; Chirine BenZaied – Bourgerie, Innovation Director at Finastra; Paul Rohan, Head of Business Strategy - Finance - Solutions Consultant at Google; Jason Kobus, Managing Director, Platform Strategy at Silicon Valley Bank; Abid Mumtaz, TransferWise for Banks, Global Head at TransferWise; and, Lead Product Owner, Open Banking & Enterprise Integration Technology at ABN Amro.