Interview | Leigh Garner | Head of Industry Relations at Discover Global Network

1. Please give us a little introduction on your current role and what you do.

I currently lead the Industry Relations team at Discover Global Network, the team responsible for engagement with industry bodies and membership organizations globally, such as EMVCo, the Financial Data Exchange (FDX) and W3C. We contribute time and resources to these bodies to develop standards and specifications that can be widely adopted across the payments industry.

Industry Relations is part of the wider Innovation and Emerging team at Discover Global Network and we often align with their themes to help accelerate our learning in these areas. This has seen us expand our coverage at industry bodies involved in digital assets and digital identity.

Beyond technical specification bodies, we participate at membership organizations that can help shape our understanding of market developments and allow us to participate in communities to exchange experiences and learnings.

All this engagement helps us to influence industry bodies, ensuring that our voice is adequately reflected as well as allowing us to bring important industry insights back to Discover. Being good industry citizens by contributing to industry initiatives and standards also helps promote a vibrant and successful payments ecosystem.

2. How do you think fintech can be used for good?

I think this will be such an important topic as fintech themes such as open banking and embedded finance mature. Financial inclusion is a topic Discover is passionate about and we recognize that the key barriers to inclusion often revolve around access, control, and trust. Fintech solutions, and specifically open banking, offer opportunities to solve some of these challenges.

Fintechs and the capabilities they provide can drive financial inclusion by providing access to financial services to the underbanked. And the openness, availability and exchange of financial data will allow, for example, consumers to better track their carbon footprint and to make more sustainable financial choices.

Open banking solutions empower and provide consumers with more control over their data and how and where its shared. Personal Financial Management (PFM) tools are often put forward as a great open banking use case. These tools allow a consumer to have a consolidated view across their accounts from different providers which can help with household budgeting and managing cashflow. More sophisticated tools can analyze spending habits and automate savings. PFM tools provide a greater chance of long-term financial wellbeing, particularly given the “poverty premium*” and the current tough economic conditions. Entities that follow open banking standards and industry data sharing best practices help to build trust in the ecosystem.

We currently participate in the Payments Association’s Project Inclusion which informs on fintech solutions that aim to reduce financial exclusion and the poverty premium. They have created some great output including papers on Affordable Credit, LGBTQ+ Banking Solutions and making cross border payments work for all.

We also partner with fintechs who support these endeavors, providing consumers with a greater degree of control and oversight into their personal finances. For example, our partner Wellthi is a social banking platform utilizing Discover Global Network prepaid and virtual card products to enable users to form group saving circles and save together towards a common goal while tracking progress to hit their milestones. Whether we can help a partner solve a problem for their customer or they can help us solve a problem for our customers, we are committed to working with partners that want to make a difference in people’s lives.

For some further reading, our industry friend Chris Skinner has written a book, “Digital for Good: How can technology and finance work together to create a better society and better planet?”

* The extra cost that households on low incomes incur when purchasing the same essential goods and services as households on higher incomes

3. How will open banking develop in 2023?

It will definitely be interesting to see how far open banking can go in various parts of the world in 2023.

In the UK for example, we’ll see the introduction of Variable Recurring Payments and banks embracing open banking opportunities beyond meeting regulatory requirements. It’s also a pivotal time for the future governance of open banking in the UK with critical discussions around the long-term regulatory framework and development of open banking underway.

In Europe we will start to see how the next phase of regulatory initiatives develop.

In November 2002, the European Payments Council published the first SEPA Payment Account Access (SPAA) rulebook. Whist currently the services are listed as optional, in the coming months a sub-set of services will be defined that will have to be supported by those participating in the scheme.

With European Commission consultations concluded in the summer of 2022 for both a revision of PSD2 and an open finance framework, we expect the publication of new proposals by the summer of 2023.

Whilst in the US, all eyes are on the CFPB’s proposals to improve consumer access to their financial data and the ability to share this information with third parties.

Exciting developments are also taking place in many parts of the world from Saudi Arabia to New Zealand to Canada.

4. What do you see as the main challenges which have prevented the full success of open banking? Are we moving towards a more open economy?

I think it’s too early to say that the success of open banking has been prevented. The foundations in the UK and Europe for example are well established and these models are being viewed with interest globally. It also very much depends on the criteria being used to measure success.

Contactless payments are often used as a comparison for the time it takes for technology to be widely adopted in the financial industry. The first contactless cards in the UK were issued in 2007, the same year that the world's first NFC-enabled phones were trialed for payments, yet it wasn’t until many years later that they became ubiquitous and for some markets you could argue that the pandemic was the tipping point.

So, if we consider what the success criteria for open banking might be, if the number of global users or open banking payments made is used, it might not be considered a full success – but it’s still early days given the contactless timeline. If success is measured by the establishment of open banking rails and frameworks that are creating new and enhanced customer experiences that could lead to a full open finance or open “x” economy, then I think it should be considered a success.

Personally, I believe the goal of open banking or in fact ‘open anything’ should be to create an ecosystem that enables brand new or enhanced customer experiences that can only exist with the availability and secure exchange of user-permissioned data.

5. It feels like we’ve discussed regulation a lot, but what else can help drive the adoption of open banking?

That’s an important question, as whilst regulation is often seen as the catalyst for open banking it’s interesting to contrast how some markets have developed without current regulation. I mentioned earlier that in the US we participate at FDX, who in October 2022 announced that 42 million consumer accounts are now using its API for open finance data sharing.

One thing that’s interesting about FDX is that all committees, working groups and task forces are co-chaired by a financial institution member and a non-financial institution member (typically a fintech) to maintain balance.

For me, that can be the key in all markets, regulation or no-regulation, partnership and collaboration between financial institutions and fintechs to co-create solutions and experiences that help people and businesses spend smarter, manage debt better, and save more to achieve a brighter financial future.