Let’s talk about digital identity with Michelle Beyo, CEO and Founder of FINAVATOR.
In episode 91, Oscar is joined by Michelle Beyo, CEO and Founder of FINAVATOR. They discuss how Opening Banking and Open Finance is facilitating the future of finance and the role digital identity has within this. Join Michelle and Oscar as they explore what open banking and open finance are, benefits and potential privacy issues. Alongside sharing success stories from around the world and what we can except to see in the future.
“Open finance layered in with a digital identity can truly help us plan better, execute, have better offerings, save money, and be able to plan better for our future.”
Michelle Beyo is the CEO & founder of FINAVATOR, an award-winning Payments and Future of Finance Consultancy. She is also a strategic advisor to FinTechs, a Money 20/20 Rise Up alumni, a Global Council Member of Women in Payments, the Membership Chair at Canadian Prepaid Providers Organization, a Payment Advisor at National Crowdfunding and FinTech Association of Canada, and a Board Member at Open Banking Initiative Canada.
Michelle started FINAVATOR as she is passionate about payments and financial inclusion. She has 20 years of extensive industry experience driving innovation across the retail and payments industry. Michelle Beyo was named the “Top 30 Best CEOs of 2021” by The Silicon Valley Review and FINAVATOR was awarded “Most Influential Leader in FinTech Consulting – Canada” in 2020.
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The podcast connecting identity and business. Each episode features an in-depth conversation with an identity management leader, focusing on industry hot topics and stories. Join Oscar Santolalla and his special guests as they discuss what’s current and what’s next for digital identity. Produced by Ubisecure.
Let’s Talk About Digital Identity, the podcast connecting identity and business. I am your host, Oscar Santolalla.
Oscar Santolalla: Hello and thank you for joining a new episode of Let’s Talk About Digital Identity. And today, we’ll hear some new ideas about open finance, open banking and definitely a bit more.
For that, we have our special guest today who is Michelle Beyo. She is the CEO and Founder of FINAVATOR, an award-winning payments and future of finance consultancy. She’s also a strategic adviser to FinTech’s, a Money 20/20 Rise Up alumni, a Global Council Member of Women in Payments, the Membership Chair at Canadian Prepaid Providers Organisation, a Payment Advisor at the National Crowdfunding and FinTech Association of Canada and a Board Member at Open Banking Initiative Canada.
Michelle started for FINAVATOR as she is passionate about payments and financial inclusion. She has 20 years of extensive industry experience, driving innovation across the retail and payments industry. Hello, Michelle.
Michelle Beyo: Hi, Oscar. How are you?
Oscar: Very good. I’m really happy to have you here in the show.
Michelle: Happy to be here as well.
Oscar: Excellent. So, Michelle, let’s talk about digital identity. I want to start hearing a bit about yourself and your journey to the world of identity.
Michelle: Yeah, I’m happy to share a little bit. I actually spent 20 years in the corporate space. Six years in telco and eight years in online shopping affiliate marketing. Ran Alaska, Lufthansa, Delta, United online shopping mall platforms. I really got to understand the relationship between customer and loyalty infrastructure.
And then I moved into the payment space. Working for the largest prepaid company globally, called InComm, out of their international office for 30 countries. And was running sales and marketing, launched their B2B division, got to see what was happening in innovation across these 30 other countries, including Singapore, Australia, UK. Helped launch WeChat in North America at 711 through the Gift Card rail, QR payment system. And truly realised – a little fearful that my kids were going to end up with Asian banking. Due to the advancements, and how far beyond where we are in North America, that Asia basically was from a banking infrastructure set in 2017.
And I took a leap into the startup world focused on blockchain digital identity at a startup as a Chief Client Officer in 2018. And after a year with them and helping with Bahama digital ID infrastructure and helping consent on blockchain. I actually won Money 20/20 Rise Up. Where they picked out of 500 women, 30 women to come into the Vegas largest payments conference in the world and have a separate accelerated track.
And as soon as I found out that I had won one of this coveted 30 spots, I quit my job at the startup and started FINAVATOR. Which is actually now four years ago in July. And starting this consultancy, did not have any consultancy experience. But did have all of my background, which I felt was touching the future of finance from telco infrastructure to affiliate marketing, online shopping. The move to digital prepaid payment infrastructures, how they were backing all new challenger bank infrastructure, BaaS infrastructure, and then digital ID.
So FINAVATOR truly became my ability to try and help banks, credit unions, FinTechs and corporations move to the future of finance. And really have enjoyed my journey out on my own.
Oscar: Yeah, definitely quite interesting, because you have been involved in several industries that are pretty different itself. So many are, yeah, oriented to interacting with the customer. So, understanding how the customer – what the customer needs, etc. And then just in the last year, you came to identity. So now you have this amazing experience and you’re doing your own consultancy.
As you mentioned, you have been working on a lot of payments and that is leading you to the future of finance. So, the topics we’d like to start addressing today are open banking and open finance. So, if you can give us what are these two terms in a nutshell, what would you say?
Michelle: Yeah. I think, at its simplest point – open banking, which started in the UK in 2017. Is a safe and secure way to share data in an ecosystem. So, thinking of back to my telco days, when I started. You would sign up to one provider for three years, and you couldn’t leave. If you left, there was a penalty, and your number was owned by that telco. So, if you went to a different telco because they had a better service, you’d basically lose your identity, which was your phone number. And have to send an email to all of your friends with your new number. And they would have to reprogram your phone number in their phones.
There was something called Open Telco. Or at least number portability, that was mandated in Canada and many other countries around 2015. And this allowed to empower the consumer to officially own their phone number. So, if I left one telco to go to another, I didn’t have to lose my identity, which I had built for, let’s say, 10 years. As this phone number represents myself. So, I was able to port it to a competitor to get better service.
So, to me, open banking is that same concept of having a safe and secure way to port my data. From one bank to another bank, from one bank to a FinTech, from a bank to a wealth advisor. So really just giving me the freedom that – the information that is mine, that defines me, can be utilised to help me get a better loan. Help me get a better rate, help me get the service that is customised to myself. Based on the data that happens to live with my current bank.
So open banking was a regulated movement that started in the UK to force the CMA 9, which is the nine biggest banks in the UK, to create an API that was standardised. To allow for safe and secure data sharing, that was all based on consumer consent. As well as create competition, by allowing FinTechs or third-party providers to hit a certain bar of the certification to be allowed in the system.
So, let’s say Revolut. If you were a Lloyds customer, and you wanted to go to Revolut. And you wanted Revolut to have these five pieces of data to offer you a different product that maybe had better pricing. You were able to do that through consent through the Revolut app. And that data was then able to safely port from Lloyds to Revolut.
And the biggest point, I think on all of this is – in open banking there is a right to delete your data. So that data can then be deleted and to me, this is creating less data in the world. And having more control over it as a consumer. As well as empowering new services, new offerings, new companies to help serve the underserved and help serve the current market in a better, more efficient way.
Oscar: Yes. And I like your analogy. You started talking analogy also in telecommunication in the mobile, consumer mobile networks. The mobile number portability, which is something I think at this point, I’m not sure it’s everywhere in the world. But I think it’s by large in many countries, it’s available and it’s something that today we take for granted. But it was very painful, not long ago, it was very painful as you have described.
So just the idea of having a similar easiness in translated to the to the banks sounds like a dream for the ones who still have not experienced. I have not experienced something like that yet. Yeah, so definitely it sounds like a great thing to keep it spreading. And you have summarised saying that this open banking is in a nutshell is securely sharing data of the consumers. So, one consumer can move from one bank to another, or even a FinTech as you mentioned so.
Michelle: Yeah, and I think the evolution of that is open finance. Which I would say is a hot topic in today’s market. The UK is moving to PSD 3, which is bringing them to open finance. Australia started with open data as a concept through a Consumer Data Right for all citizens across five industries. Which I think is the most concise vision across all countries. So, they started with open banking, moved to open finance, open telco, open energy, and then they’re going to land in open data. And it’s all centred around a Consumer Data Right across all data.
Very empowering vision coming out of Australia, that many countries are just starting with open finance. Turkey, Nigeria, Saudi Arabia, Brazil, just moved to open finance. So just to describe it – it really is, instead of just being banking, FinTech, third-party payments data or bank account data. It’s broadening the spectrum to the insurance, wealth, mortgages. Kind of more of a holistic view of anything that touches your finances. So, it’s really expanding to allow you to port your data from multiple different aspects of finance.
Oscar: OK. So, the key here in open finance is that you do similar – let’s say portability. We use it, we use the same word between different services. Not necessarily financial services, but as you said, that touch some financial data, correct?
Michelle: Yes. So if you want to use some data from your Lloyds account to help you get a faster, cheaper, better mortgage that’s more customised to you. Maybe that mortgage provider is not a bank, but they’re a licensed mortgage provider that has certified in the system. Then you’d be able to facilitate that data sharing, same example to a wealth provider or an insurance provider.
Oscar: Alright. And besides that, benefits of the portability that we can, I can even visualise on my mind. What are the other benefits that there are for both the consumers and for businesses?
Michelle: Yeah, I would say one of the biggest ones is – when you think of FinTechs trying to get certain aspects of data. And not having to get data they don’t need – so only getting the five pieces of data, with clear consent from the customer. And the customer not having to screen scrape this data out of their account without their knowledge.
So, a lot of screen scraping issues are when open banking first came to fruition in the UK. It’s largely because 1 million UK citizens were screen scraping. Which is a service that is being utilised where it looks like you’re logging into your bank. You’re putting in your passcode, and then it’s giving access to that FinTech to look at your overarching account and scrape the whole data. To only grab the five pieces they need to push it into the system.
So, what this does is [A] it’s unsecure. [B] the customer has no idea they’re breaching their bank agreement by using the service. And then the FinTech ends up with all this data that they don’t need, or want. Have to store it safely and securely, when they only needed the five pieces.
So, when you get to an open banking system, they request the five pieces, they get the five pieces in a safe, secure type of API. And then, therefore, they’re able to delete those five pieces of data, because the way that it was coded into the system, if so requested by the customer. So, it’s a data management system, all based on consent.
Oscar: Yeah, it sounds pretty good absolutely. Because imagine that all my data that is on my bank is passed to the – let’s say insurance. And then the insurance has the duty to delete whatever they don’t need as well, sounds terrible. Because you know, the less data that is transferred, the less data that is stored somewhere, the lower the risk of so many data breaches that are happening nowadays.
Michelle: Yeah, on the data breach point, I always like to bring up unfortunately Marriott because they had 7.1 million data breach occurrences at one time, and it was an internal issue. They were like layering in some accounting, or loyalty system and it was an internal data breach. And this was back I think in 2018. They didn’t compensate any of the users. But think about anytime you check into a hotel. At this point, they asked for your driver’s license or your passport, plus your credit card. The amount of data a hotel has on you is pretty concerning, considering they don’t have the data security standards that you would have at a bank.
So, if we can get to a world – getting to your digital identity questions. Where a QR check in doesn’t actually have them store any of my data, but just validate I am who I say I am. So that they don’t need to actually hold my actual passport image with all of my sensitive data. In a non-secure, I don’t want to say non-secure, but not highly secure infrastructure.
Oscar: Yeah, exactly. Another good example, obviously, the hotels. They will benefit, both the businesses and the consumers would benefit with open finance. And yes, I start – while you explain this idea, I was, OK, some of the data passes from one, let’s say from the bank to the insurance company. But just a minimum should be passing, so that – also thinking from the identity point of view. I’m imagining the federation, right? So, at this point, what is on your view the role of identity on this paradigm that you just described?
Michelle: Yeah, I think it’s quite paramount as a base layer to most systems. Because if you can authenticate you are who you say you are, that’s the most important part of any one transaction. Especially a transaction that has to do with your data or has to do with your finances. So, I think it’s quite crucial that we find a way that authenticates ourselves. Especially with AI, and all of this machine learning infrastructure, cybersecurity challenges.
How do we ensure that we are the only entity that is Michelle Beyo and that I can then surely authenticate myself? Before I do a data share from one bank to the other, or before I do a financial transaction. And we’re going to have to layer up from our six-digit code being sent to a phone text to authenticate yourself. As we move forward in the future of finance. So, I think digital identity is crucial. And has to be put into a system, in a way that ensures that there’s only one identity for any one person.
Oscar: Yeah, indeed. There has to be some level of strong authentication, that that is a must. And as you have mentioned a bit earlier also, always with a consent, inevitably, data sharing transactions.
Now, moving into what are the standards to also understand – without going into too much detail. You mentioned that this started in UK and in UK, there more implementations. This is really happening in real, but what are the main standards that are making this possible? Or are going to make this even more possible if we think of open finance?
Michelle: Yeah. So you know, what’s interesting is – as you look at the world at the moment, and you look at open banking, open finance. Not all countries have a digital identity infrastructure. So, what that does is makes the open banking infrastructure more complex, harder to authenticate. And I think even more than open banking – real-time rail infrastructure needs the authentication. Digital identity for any type of fraud reduction of authenticating you are who you say you are, and it’s going to an entity who is authenticated. So that we can remove the scams out of the system.
I’d say the best digital identity infrastructure is probably the Indian-based UPI. It was government issued; it was a mass amount of people. And it was done very early on, on a global scale. It’s not the exact model that probably should be utilised for other countries. But they have definitely – through their digital identity framework, have been able to even. There’s homeless people in India with QR codes and a bank account due to their digital identity infrastructure. And when you pass them in the streets or you pass a tiny shop selling something, they have QR-based payment infrastructure that is largely attached to their digital identity. Which creates a more financial inclusive infrastructure.
In Australia, they have a digital identity framework but it’s not as widespread to the same degree as India. The UK is still working on their digital identity infrastructure. So not every country has lined up, open banking, digital identity and real-time rail. But these are three very crucial aspects to the future of finance because the authentication from digital ID is a safety point. The real-time rail is the fast and secure movement of the funds. And the open banking is the safe, consent-driven data sharing aspect. So, once you have all three of them, you’re really setting yourself up to be facilitating the future of finance.
Oscar: You mentioned one term that maybe is not so familiar, at least for me, you mentioned real, real-time rail. What is that exactly?
Michelle: Yeah, they’re real-time rail is an instant payment system, sometimes called that. And the first one ever created was in Switzerland, actually, in 1989, 66 countries have faster payment systems. The UK launched quite a long time ago. But the US just launched their FedNow, that is what it’s called in the US. Which is their real-time instant payment rail, just this year. And Canada hasn’t launched theirs just yet. So, there’s many countries who have this payment infrastructure. When you look at the US last year, or Canada, still, it takes three days, three to five days for bank payments to clear and that’s just the older infrastructure of payment settlement.
Oscar: OK, OK. Perfect. Yes, indeed, you have emphasised that all these components needed in, of course, the authentic the national digital identification is a key point. You are correct, not many countries in the world have something, I will say, suitable enough for doing this open finance. I was – in terms also of authentication that reminded me that, for instance, the FinTechs has been for a while. And not long ago the authentication was just username and password, nothing else. So, of course, now, most of the FinTechs have something better than that. But yeah, I can see something that it takes time. All this component takes time to come together to make possible some of these use cases.
So, if you can tell us some of these success stories, now seeing from the perspective of use cases. Let’s say success stories from, if you can, from different part of the world also to illustrate it better.
Michelle: Yeah, so if we’re talking digital identity, I think Scandinavia has done probably one of the best jobs. I think Estonia was one of the first. The other really crucial part of digital identity is you can’t have CBDC, or digital currency in a very safe and secure way without a digital identity framework. So, I think there’s some great examples down that front.
When we’re talking open finance, open banking, the countries I’m most impressed by, obviously, is Australia. They are a country that has five major banks. They are kind of an oligopoly in the sense that those five banks hold quite a bit of the customer base. But they took an initiative past open banking, past open finance, to embed a consumer data rights to every citizen across five different industries with a roadmap to start with open banking. Moved to open finance, open telco, open energy, land with open data, which is really future proofing their country, for the future of the ecosystem. A digital ecosystem, which every business is now turning into a digital business.
So, they’re going to have a really great base layer of understanding that the customer owns the data, the customer is able to port the data, and the customer is able to delete the data. So, by creating a data right infrastructure, and then porting it across multiple industries. I think they’re going to have incredible innovation and eyes are definitely on them as they’re enabling this ecosystem. That really is kind of the future of any one country’s vision of how do you enable digitisation of an economy.
The other country that I’m pretty impressed by is Brazil. In the sense that in the middle of the pandemic, they made their first move to open banking. They made a 12-month mandate that they were going to hit an open banking live ecosystem within 12 months. And open access to their Central Bank of Brazil. And therefore, by opening the access to registered TTPs, which are Third-Party Providers. Companies, like Pix, were able to create a FinTech that reduced the cost of sending money and took the underbanked, underserved in Brazil, and gave them a digital bank with faster, more affordable payments. And I don’t have the exact number. But I believe they’re past 7 million customers and doing billions of transactions on a daily basis. And I believe they reduced the cost something like by 40%, by being able to have direct access to the central bank and fall directly in line with the open banking system.
And after 12 months of being enabled to an open banking system, they immediately started working on an open finance system, and are launching that within 12 months. So, I think the alignment, the passion, and the execution out of the Brazilian market is pretty impressive. And just the pure enablement of new FinTechs that are more affordable services. And finding ways to serve the underbanked, underserved, they’ve done a phenomenal job.
Oscar: Yeah, it sounds like that – it sounds definitely amazing. Among all these, well, existing use cases and what comes in the future for open banking and open finance, what are some potential privacy issues that you could tell us?
Michelle: Yeah, I think every system has to be truly based in a liability model. This liability model has to be extremely clear to everybody within the system. There has to be protection on that liability model. And I think it’s just ensuring that the certification system that allows for third parties to come into the system is robust, is reviewed, that these parties that have been certified inclusive of banks are always looked at to ensure that they’re continued to be certified to have access to the system.
But I do foresee in the future that customers are going to choose to have some type of insurance on their data. That they so choose, just like you have insurance on your travel, or insurance on your health, like actual data privacy insurance.
Because – think of the Marriott issue, or gosh, there’s data breaches every day of the week, and none of the data breaches have to do with open banking, open finance, they’re internal data breaches or external data breaches, or hacks. That there’s no real repercussion to the customer, like, or to the actual party who has had this data breach. There might be a fine, but there’s no settlement to the actual end user whose data has been potentially put on the dark web or given to different parties.
There’s got to the point where, if we have enough of a safe and secure data sharing infrastructure, we should be able to insure our data and be safe and secure. And if it’s breached, have some type of offset. But we have to get to a much safer secure infrastructure of how data is shared in the first place.
So, I just truly see that open banking, open finance is creating the pipes for the water to go through and be able to turn them on and turn them off. And we just don’t have those pipes today in every country. And I think it’s just super important for the next layer of the future of finance.
Oscar: Yeah, indeed. Now, if we look at the future, what kind of use cases or what open finance can do in the future? Something that we are not seeing today.
Michelle: Yeah. So, in some countries, they started to enable dashboards, like holistic dashboards of your financial health. So, in these dashboards due to open banking, you would be able to see what your mortgage is. And then it would be able to AI predict what other offerings you should potentially layer in. To add to this product, or tell you that your current mortgage is not serving you. And that there’s three or four other offerings that would be a better mortgage based on your current finances, or the market. And then they’d be able to offer you three different companies that you might want to look into.
So, what this service can then do is you can actually put in your loans – this dashboard would be personalised, just for you to see kind of your financial health. It would help people have an ability to plan better, understand their finances a little bit better. From that perspective, I think it’s going to also create a whole bunch of things we haven’t even thought of, new services, new opportunities, and new ways to ensure you’re saving for your retirement.
Just kind of like round up did in the sense of, you know, if you’re paying for coffee, and it’s $1.50, rounding it up, or if it’s $1.40, rounding it up to $1.50 and then putting that in your pension plan or putting that into a robo-advisor. So that you’re earning money by saving without knowing it, or without feeling it, kind of perspective. So, I think just like the Internet has changed so many ways of what we are doing, and made our lives easier, in many ways. I do think that open finance, layered in with a digital identity can truly help us plan better, execute, have better offerings, save money, and really just be able to plan better for our future.
Oscar: Yeah, sounds definitely a lot to expect for the future what open finance will bring us. So, Michelle, last question for you, for all business leaders that are listening to us now, what is the one actionable idea that they should write on their agendas today?
Michelle: Yeah, I think what they should write is that innovation is driven by ideas. And that there’s an opportunity, especially now that the world has gone digital, to listen in to panels, topics that interests you, but you don’t have all the details on, similar to this podcast.
There’s panels happening in Australia on open finance, or Brazil, that you could listen into. You don’t actually have to travel to these conferences. But you can truly grasp the innovation that’s happening in other countries. And then think about how you can create something for your citizens, for your company. To pivot and start moving towards the future of finance, by learning from other countries who are already there.
Oscar: Yeah, definitely, I couldn’t agree more. And that’s really one, learning more about these interesting topics that are going to impact us mostly positively in today, in the future is also one reason why we invited you. So, thank you. Thanks a lot for being with us and this was really fascinating conversation with you, Michelle. If people would like to follow the conversation with you, or know more about what you’re doing, what are the best ways for that?
Oscar: OK, excellent. Many ways to do it. So again, Michelle, it was a pleasure talking with you, and all the best.
Michelle: Thank you so much, Oscar. It was a pleasure being here. Have a wonderful day.
Thanks for listening to this episode of Let’s Talk About Digital Identity produced by Ubisecure. Stay up to date with episode at ubisecure.com/podcast or join us on Twitter @ubisecure and use the #LTADI. Until next time.