Open Banking doubts!!!

I'm answering a few questions I received related to Open Banking saying it will not work and grow in Egypt:

And before answering such questions I’m just refreshing your minds with some key concepts you need to know about Open Banking simply.

Open banking is about an authorized, secured and limited sharing of the customer's financial information and transactions with 3rd parties after receiving the customer's consent (permission).

The sharing is limited to the authorized 3rd parties and during a period the customer approves or even per request.

Open Banking shared financial information such as:

• Account: account holder name, account number, IBAN etc.
• Credit card: card network, last four digits, name on card etc.
• Transactions: description, amount, category, merchant name etc
• Balances: current, available etc.
• Regular payments: standing orders and direct debits

The customer benefits from sharing this information by receiving customized products based on his needs, capabilities and real income/outcome which makes the products more viable for the customer.

For example, imagine that you are receiving tens of calls offering you to buy a Villa with EGP 10 M while your salary is just EGP 15K, I think this is an improper offering while it would be worthy and attractive if you receive a call offering the best to fulfil your needs from the budget point of view, the same can be applied on automotive, tourism and insurance industries or any other product/service can be customized.

?The product/service providers and befitting from a higher rate of sales and also save the marketing efforts to be used in the right channel and right segment.

?Finally, Open Banking mainly two services:

Account Information Service Providers (AISP), for sharing account information,

And Payment Initiation Service Providers (PISP) initiate payments from the customer’s bank account or financial cards.

?

Q1: As Egyptian mentality, ?will we accept psychologically to share our

financial information with someone we don’t exactly we don’t know?

A1: currently we do with whom we know through the normal Authorization letters for our close relevant like husband and wife, but for the 3rd parties, when it is well defined, specifically authorized, predefined reason and objective, secured and timeboxed, YES, this will be accepted by time.

Q2: Is it applied in Egypt?

A2: Conceptually Yes, as to what is happening in the InstaPay for the second service we just explained above PISP, as per my understanding, at least two banks are working on this in Egypt but I’m not sure of this, but anyway, we are flowers in the fintech and yet not leading in this industry, and considering that it is becomes mandated in some countries in Europe and working on now in some countries like KSA, Bahrain and UAE so it will be applied for sure at some time, I fell that something is being cocked in this regards.

Q3: How can the banks benefit from this model?

A3: Banks can collect money by collecting fees and commissions for sharing such information.

Q4: is there technology providers that can help with this?

A4: sure there are many capable to do.

Dr. Hosam AbouElDahab

Fintech Advosor

01098899402