• Andrew Boyajian, VP of Product for Payments & CX at Tink


• 07.03.2024 05:22 pm

With exciting regulation and momentum in the realm of Open Banking, it’s vital to understand the coming opportunities and challenges in the industry. Andrew Boyajian from Tink joins us to illuminate the history of Open Banking regulation and where it might go next.

Thank you for joining me today. Why don't you introduce yourself and tell us a bit about your day to day.

AB: Sure. My name is Andrew Boyajian, and I am here at Tink, and I've actually recently been appointed the Vice President of Products for Payments and Consumer Experience. It's a brand new role at the company and it is terrifically exciting because I think it really speaks towards all the excitement that we see in 2024 and beyond. As a specific example, in the UK, we really see 2024 as the year that commercial VRP (Variable Recurring Payments) is going to be unleashed in the market, and it's going to help consumers manage their finances by providing flexibility as well as transparency and control over their payments. It's really exciting and I'm thrilled to be in this position, sitting over payments to help realize some of that potential.

Congratulations on your new role. Could you tell us about some of the regulations surrounding things such as cross-border payments? I imagine there's a lot of opportunity there.

AB: There's of course a lot of regulation in open banking. Open banking itself kind of began from a type of regulation. PSD2 or Payment Services Directive two is what we call it. And that was the EU effort then to promote a new way of looking at payments based on the idea of data and providing then access to that data, and without being too technical, is that with data, you have the ability to read it, or you have the ability to write it to record it, to create something. 

When we talk about payments in open banking, very often it's that latter component. It's the ability to write that data or to take an action on it. And that's exactly then what PSD2 did is it opened up ways then for different parties that typically might not have been in the payment flow, to have access to that data, to create payments on behalf of account holders. So at its core, that is what open banking actually is. 

Within that, of course, there are considerations on how to look at that regulation and one, just how to navigate it and create products that are usable. But two, what are some of those milestones that are coming down the line that are going to further propel these types of payments and make it even better than what we have today? So earlier you had asked a little bit about some of the day to day aspects, and I suppose, and I hope the same is true for you, that usually most days are unlike any other days. It's always different. It's a bit of a new adventure and it's exciting as a result.

When we talk about regulations this can be maybe a bit dry, maybe a bit boring, and you think they can't be all that exciting, but they actually can be! So one of the things as we look forward is what are some of those major milestones that we see in the regulatory environment? Last year I think we saw the beginnings of quite a bit. There was talk around instant payment legislation in the EU like the SEPA (Single Euro Payments Area) payment account access scheme or SPAA (SEPA Payment account access) as well. Over the summertime some progress in the UK on commercial VRP and what that could look like in the future. So there are quite a few things that I think were of interest last year that are being carried through this year. So you had those fundamental building blocks in 2023 and 2024 is when they're actually going to come to fruition.

The SPAA scheme seems like an interesting starting point, but there’s also some unknowns with how it’s going to evolve each year. Could you shed some light on those evolving aspects and if there are any challenges or opportunities that come from that?

AB: So, first, thinking about some of the challenges, I think when we look at the UK market, it benefited from a couple of things in terms of open banking. The first was that it had a faster payment network already in place, and all banks were already connected to it, and it had high usage amongst a retail or consumer base. So everyone was familiar with the idea of a faster payment. And then as well in the EU we had a regulatory base for promoting open banking payments. So you had some really nice initial ingredients that allowed us to get to the point where we are now with payments.

It's a relatively good adoption then, of open banking payments nearing a tipping point where it becomes very commonplace to use your bank account to pay for something. One of the challenges that we see in other markets and these challenges are currently being addressed, but it's that ubiquity of instant payments. I mentioned earlier, one of the sort of foundational blocks that we saw last year was this concept of instant payment legislation in the EU. And then what could that actually mean? 

It’s really exciting because the EU has had faster payment capabilities. It's just they're not everywhere and not everyone uses them. So recognizing that and recognizing that consumers as well as businesses benefit from faster payments, because there's certainty then that those payments are moving or that they've not occurred. From a business perspective, if you get funds quicker, that means you don't necessarily need to use your own capital to front those funds, or you can easily and quickly refund a customer because the settlement, of course, has already arrived.

So recognizing those benefits, then the EU is putting in place legislation that is going to promote or make it easier to use some of these faster payment rails like SEPA instant credit transfers. And what that means, is that open banking payments are going to be even more powerful, because they're drawing on that same basic ingredient that the UK already has, which is that faster payment service.

It's terrifically exciting to see some of that progress become sort of entrenched now in a view of how to progress an industry or how to progress then within the EU to create a better payment environment and how it relates then to the SEPA Payment Account Access Scheme, which even its name, SEPA Payment Account Access Scheme is a bit long and what does that mean actually? If I go back to what I was saying around open banking and data, you can either read it or you can write it. And what the SPAA scheme is trying to do is create new ways of actually reading or writing that data.

It looks at consumer use cases or business use cases and tried to design solutions for those. For example, if we think about what is vanilla in open banking under PSD2, It's the idea of just one payment. And that's it. Very simple, right? But I would ask you, if you think about sort of your day to day spend and you know what merchants you go to, probably a significant portion of your payments are actually recurring. So that could be a subscription. It could be if you go to Starbucks, for example, and you're using their app.

It's that recurring experience. You're going back, maybe you're using the same payment method and really that is then not considered in PSD2, but it's something that is core to all of us in our everyday lives. SPAA attempts to look at areas like that and create product solutions for them. Rather than just looking at one single payment, instead it's created a way for you to look at recurring payments through open banking. So it's a step forward in that sense, which is quite cool. And now it's powered or potentially powered by a more ubiquitous, faster payment experience. It's really, really fascinating to me how all those pieces are lining up and converging. I used the phrase tipping point earlier, but hopefully now it's even more obvious that we're really approaching a point where open banking can power almost any transaction that you can imagine.

That’s a great rundown of open banking and how it’s evolved thanks to SPAA. 

AB: One other point that you had mentioned is every year there might be something new. That's a bit like an iPhone or an Android. Every year there's a new model, some type of new feature, and SPAA is a bit like that It is a scheme that is open now for participants. And in fact, on February 9th, Tink was only the second or third, depending on how you count, participant to be accepted into SPAA. It's very exciting for the team here that was responsible for that.

SPAA is launching with a limited set of payment types. They call them data assets or transaction assets. I've been talking about recurring payments and that's one of the ones that is supported right out of the gate. And that one is, of course, exciting because it matches our day to day behaviors. But there are other types of assets or functions that SPAA supports that aren't included in its very first minimum viable product or its first offering, and those types of transactions will be supported as the scheme grows, and as more third party providers and banks begin to participate.

Congratulations to the team for being accepted into SPAA. It's incredibly exciting, is there anything else that's exciting about open banking maybe a little further down the line?

AB: I think it's going to be the evolution of all of these things. That's exciting. Thinking about SPAA, it's something that I've been engaged with since my very first day at Tink. Just about a year and a half ago, I was sitting and helping them think through what the data messaging should look like. What should the roles and responsibilities be between participants in the scheme? It's been very exciting to see some of these exercises which were Excel sheets or PowerPoint presentations and group conversations, be taken through that process into a formal rules book that's been published by a central authority in Europe, and that's now being used as the base for actual participation. So that in and of itself, is very cool and exciting to see that evolution of work.

As we look forward I think what I'm really excited about is to see faster payments become more ubiquitous and more accessible to all parties within the EU. To really see it reach that standard that we have in the UK, and we see other markets as well in that journey too. So obviously in the US recently introducing FedNow, which is a new faster payment service or faster payment rail in the US that is complementary then to the clearing houses real time payment network, something that's been in the US for a while. Canada of course, has a project going on to modernize some of their payment rails, inclusive of a real time rail or RTR. All of that is going to be terrifically exciting.

I think possibly the other area to maybe touch on is going to be advances in how we think about the security with some of these payments. An interesting example, it’s a bit EU specific, is the idea of a new type of electronic ID and how that can sit in a wallet and be used to authenticate payments and not just payments. I mean, the concept extends beyond that, right? It can be used for travel documents and things like that, but it's a way to create more security when you're conducting business online and reduce fraud rates even lower than they actually are in open banking, which is already quite low. It's just a terrific layer of security on top of everything we already have. And to see the EU taking that forward, and we'll see quite a bit of development in that this year and then early next year. To me, that's just exciting because these are all the right building blocks to then assemble something that's going to be bigger and greater than what we probably can imagine right now.