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Industry roundup: 10 December

Open banking: Enhancing the financial landscape in the Philippines

The International Finance Corporation (IFC) selected Open Banking Exchange (OBE) (openbankingexchange) to operate and support the development of the open finance framework in the Philippines. OBE is a worldwide division of Open Banking Europe, established to help countries promote open finance standards and best practices.

Technological advancements and innovations such as open banking continue to reshape the banking industry. This practice uses application programming interfaces (APIs) to provide access to data transactions, consumer banking capabilities, and other financial information from banks and non-bank financial providers to third-party financial services providers.

As part of the World Bank Group, IFC is the main global development agency for the private sector in emerging economies. IFC recognizes that financial services need to adapt their way of working in the new digital environment in collaboration with more than 2,000 companies around the world. Therefore, IFC pursued specialists in areas such as real-world and operative strategies, implementation of industry-level expertise and governance, and technical and operational measures in order to support the open banking industry in the Philippines.

The OBE will assist IFC and advise on the plan and establishment of local preparations for open finance as part of the World Bank's extensive program with Bankgo Sentral Ng Pilipinas (BSP). The BSP published a circulation that sets the framework for the development of innovation and the integration of financial services. OBE will work with various financial sector participants to:

  • Advise on the key elements and opportunities for the proposal of open banking systems.
  • Evaluate the readiness of the participant.
  • Help develop industry plans for open banking and open finance in the Philippines.
  • Manage workshops and lead newly formed industry groups through market development and decision-making processes.

The Philippines will be able to develop a successful open banking plan in collaboration with and with expertise from the OBE, commented John Broxis, Managing Director, Open Banking Exchange. Open banking has the possibility to increase access to financial services and promote innovation and widespread participation in the digital economy. Players in the industry will benefit from OBE's hands-on experience as they seek to find joint arrangements that can lead the Philippines’ financial system to a new stage of dynamic growth, said a spokesperson from IFC.

Cross-border wholesale CBDC experiment: Bank of France and Swiss National Bank

According to the Bank of International Settlements (BIS), the Bank of France and Swiss National Bank successfully completed the newest wholesale Central Bank Digital Currency (CBDC) transaction. The Project Jura (Project Jura - Cross-border settlement using wholesale CBDC) was created to examine the processing and settling of foreign exchange (FX) transactions in euro and Swiss franc. In addition, further exploration on the issuance, transfer, and redemption of tokenized euro-denominated French commercial papers (CP) between French and Swiss financial institutions was conducted. The collaborative group of Project Jura was comprised of private sector organizations such as Accenture, Credit Suisse, Natixis, R3, SIX Digital Exchange and UBS. The project continues the experiment to illustrate the functional feasibility of integrating tokenised assets and wholesale central bank money conducted by Swiss National Bank (SNB) and BIS Innovation Hub under Project Helvetia (part of a series of wholesale CBDC experiments originated in 2020).

Benoit Coeure, BIS, commented that Project Jura ensures that a highly-developed wholesale CBDC can play a significant part for a secure and impartial settlement asset for international financial transactions. It also shows how central banks and the private sector can work together internationally to improve innovation.

According to BIS, the experiment included a “direct transfer of euro and Swiss franc wholesale CBDCs between French and Swiss commercial banks on a single distributed ledger technology platform operated by a third-party vendor.” The foreign exchange transactions and tokenised assets were processed and settled securely using payment-to-payment and delivery-to-payment methods. The experiments were conducted in a realistic situation, using real value transactions and meeting current regulatory requirements.

Policy issues can materialize from issuing wholesale CBDCs on third-party platforms and providing regulated non-resident financial institutions with direct access to central bank funds. Project Jura investigated a new approach that includes subnetworks and dual-notary signatures that allow central banks to issue wholesale CBDCs on third-party platforms and allow regulated non-resident financial institutions access to wholesale CBDCs.

Switzerland, a small and open economy, requires efficient and strong cross-border payment and settlement agreements. The Project Jura will explore how distributed ledger technology can be used to map what a future cross-border payment looks like between financial institutions, commented Andrea M. Maechler, Member of the Governing Board, Swiss National Bank.

Sylvie Goulard, Deputy Governor, Bank of France, mentioned that the experimental wholesale CBDC program launched by the Bank of France in 2020 was completed and shows how the wholesale CBDC optimizes cross-currency and cross-border settlements, which are critical parts of international transactions.

Project Jura has contributed to the ongoing G20 work on cross-border payments. This project is experimental and should not be interpreted as an indication that the bank of France or Swiss National Bank expect to issue wholesale CBDCs.


Deep dive into Swift gpi

Financial institutions continue to feel pressure to provide quicker, more convenient payments across national boundaries. Furthermore, treasurers continue to seek more detailed and comprehensive information on payments from their banking institutions.

For years, financial institutions aimed to make cross-border payments run as seamlessly as possible, especially with the task of handling minimal common standards across many countries. Additionally, international transactions have always been complicated to evaluate due to cumbersome manual processes. In order to alleviate the problem, SWIFT launched their global payment innovation (gpi) to improve the international banking experience of customers around the world.

In order to improve cross-border payments, SWIFT gpi was created as a collective system designed to provide new standards by connecting all participants to the end-to-end payment network. In addition, SWIFT gpi aims to improve customer transparency, speed and traceability without impacting compliance obligations, credit and liquidity risk requirements by utilizing a cloud-based solution. Participating banks must follow the business rules outlined in the Multilateral Service Level Agreements to maintain uniformity and consistency throughout the cross-border payment transaction process.

Below are the ways international payments are processed according to SWIFT:

  1. Payment Processing Speed: Payments are made on the same day the payment starts (varies by business hours) and help establish a business relationship with the supplier.
  2. Payment Reference: Payments can be tracked by a unique reference number attached to each payment transaction, and status and confirmation can be checked at any time between the corresponding banks.
  3. Cost of Payment: SWIFT gpi includes transparency, so end users receive a cost breakdown of payments, including exchange rate costs.
  4. Payment Identification: Payment information is unchanged and consistent throughout the process. Therefore, both the issuer and the recipient receive the same information to identify the payment.

With SWIFT gpi, corporations are able to benefit from same-day funds availability, transparent fees, end-to-end tracking of payments, and transmission of unaltered payment information that helps corporates improve their capability to grow and conduct their business internationally. High-value commercial transactions can be initiated between banks and their corporate clients through SWIFT gpi.

Furthermore, financial institutions can send and receive funds in a fast, transparent, and secure way by adopting the new standards for cross-border payments created by SWIFT gpi.


Digital Payroll and Human Resources Management: Bento launches into three markets in Africa

Bento, a Pan-African Digital Payroll and Human Resources Management (HRM) platform, announced launches in three new markets, establishing its presence in Ghana, Kenya, and Rwanda to expand the company's scope throughout the continent.

The payroll and human resource management (HRM) market in Africa has great potential with more than 400 million workers. African companies have remained mostly analogue, with the use of spreadsheets, bank portals, wire transfers, cheques and cash, until the new implementation of payroll and HRM services. Bento brings Africa’s payroll and HRM into the digital era, enabling different market participants to share and use data to develop credit solutions.

Bento, founded in Nigeria in 2019, was formed to address many of the challenges facing African businesses. With Bento, companies can automate payroll, taxes, pensions and other legal transfers. Through a cloud-based platform, Bento supports African enterprises and provides them with security by streamlining many processes. Additionally, this platform provides employees access to third-party services such as loan solutions. This includes options to pay tuition and rent monthly instead of annually, unemployment insurance, savings and financial investments. All of these are provided free of charge to the employer.

Bento obtained full operating licenses in each market and will build local teams in Ghana, Kenya, and Rwanda to adapt its products to the cultural and economic differences of the regions. Over 900 active Nigerian businesses are served by Bento across all sectors in the country's largest health and financial services companies (such as Hygeia and Tangerine Africa, Paystack, Kobo360, Branch, Helium Health and LORI Systems).

Also, Bento provides employees with access to credit solutions and other third-party products and services. About 95% of African consumers have never used formal credit and rely on informal lenders and savings programs. Additionally, an average of 4.5% of Africans have access to credit cards, compared to 65% in the United States. Bento developed a partnership with Israel's largest P2P lending firm, Tarya, to build Bento's proprietary loan engine that guarantees the company to offer significantly better interest rates than traditional retail lenders, with instant disbursal. Employers can also access Bento via the secure cloud-based web platform and employee mobile app available at the iOS App Store and Google Play. Bento aims to continue to grow rapidly across the continent and plans to expand into Egypt, South Africa, Uganda, Tanzania, Angola, and Senegal by the end of 2022.

Chidozie David Okonkwo, Co-Founder and COO, Bento, commented on the substantial progress made with payroll and HRM in Africa. He expressed that Bento aims towards further enhancements through another upgrade, Salary 2.0, to help in the payroll transformation activities.


TAS Group migrates POS payment acceptance to the cloud via Amazon

TAS Group, the Milan, Italy-based payments software specialist, has announced its development of the Global Payments Platform (GPP), which aims to make its solutions easier to adopt and accessible to new players in the open banking and open finance ecosystem.

The group says the platform integrates under a single architectural concept its own offerings in cards, account-based payments, transaction banking and the financial value chain. “Powered by the innovative “as a service” logic in the cloud, the GPP accelerates the delivery of flexible, efficient services to market while responding to changing regulatory requirements,” its announcement states.

TAS, which was set up in 1982, adds that for more than a decade it has provided customers in the payments industry with software solutions validated according to Payment Card Industry (PCI) Council compliance standards, and services certified under the PCI-DSS security standard, issued by the PCI Council for payment service providers (PSPs).

TAS migrated its POS payment acceptance services Amazon Web Services (AWS) in early November, successfully submitting itself to the PCI-DSS Level 1 Service Provider certification, the highest level of PCI certification for PSPs.

The group says that the new infrastructure is based on container architecture and makes extensive use of AWS services, such as Amazon Elastic Kubernetes Service (Amazon EKS) and Amazon Aurora. The benefits of the migration include simplified business continuity, the decreased effort of TAS personnel dedicated to managing infrastructures, and greater flexibility and scalability of customer service; all needed for being agile in a constantly evolving market.

“The world of acquiring and omnichannel payment acceptance is evolving at extremely high rates, both in terms of consumer preferences for the payment method and channel, and in terms of habits and therefore transaction volumes and peaks,” says Massimiliano Quattrocchi, Country Manager of TAS, 
For an independent software vendor (ISV) such as TAS it is essential to constantly develop and evolve its applications, guaranteeing good independence from basic hw/sw infrastructures and the ability to take advantage of the most advanced technologies and innovations offered by the market.”

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