Hi Ramesh, welcome to Fintech Interview Series. Please tell us about your fintech journey so far.
The Customer and Third-Party Risk business within LSEG really has been operating as a ‘fintech’ since before the term was coined. The origins of our various business areas stem from the advent of increased regulation in the early 2000’s, which placed increasing demands on the financial services industry to identify, monitor and report on AML and KYC risks. Since then, our business has evolved in response to unprecedented 21st century macro socio-economic events which have shifted the business landscape worldwide – i.e. the 9/11 attacks, which increased regulatory requirements; offshoring/globalization, which increased the complexity of supply chains; the global financial crisis, which again not only shifted regulatory obligations but also initiated a shift to further automation, and most recently COVID-19 and the drive to achieve fully digital processes. Through all of these changes we also proactively evolve our offerings based on emerging technology and long-term trends.
LSEG GIACT’s new partnership with Mastercard addresses an emerging trend in the U.S. Could you please elaborate on this.
User-permissioned information-sharing, facilitated by open banking is a global trend, which supports financial inclusion, data privacy and improves competition within the financial and non-financial sectors. We are very excited about open banking for a host of reasons – it helps make life easier for consumers; it allows fintechs and others to develop better, more innovative products; and it helps banks maintain a strong, positive relationship with their customers – in summary, it is driving convenience and innovation.
In the U.S the emergence of this user-centric information-sharing ecosystem hasn’t had the same robust support of regulators as in other areas of the world. Instead, the growth is mainly organic, and driven through market-led initiatives. Our partnership with Mastercard is focused on providing a secure, reliable, and trusted channel for businesses and consumers to benefit from Open Banking, with the confidence that the solution is being delivered by two of the most trusted names in financial services.
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Accelerated digitization of the economy creates conceptually dichotomous user experience and fraud challenges. How can it/that be minimized by leveraging open banking?
Digitization does shift risks associated with fraud and financial crime from more analogue forms to digital – as more money moves digitally that is naturally where fraudsters and criminals are going to focus their attention in exploiting vulnerabilities. However, there are multiple tools that businesses and consumers have to protect against the different types of online fraud. One of the essential processes is having multiple sources of verification that allow businesses to confirm they are dealing with a legitimate request from their client. Open Banking is helpful in this regard as it is another source of trusted data against which to help perform validation.
In terms of value, Juniper Research estimates the global value of open banking payments will exceed $116 billion by 2026, up from $4 billion in 2021. What is your ideology?
In our view, the growth prospects for open banking in the U.S. and globally are very promising, driven by increasing regulatory support, increased consumer adoption, demand for low–friction, personalized experiences, and global expansion. As the ecosystem continues to evolve, we can expect to see a broader range of innovative financial products and services that provide enhanced customer experiences and drive industry growth.
How is AI being used for asset management and building a good financial ecosystem?
AI has use case applicability within financial services and more broadly. Within the Open Banking/fraud prevention space we see immediate opportunities for AI to supplement many of the manual research processes that both data providers and businesses undertake for risk-based decision-making.
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The benefits of open banking are multi-faceted. Please highlight any two.
- Empowerment of the consumer (data subject) to control how their data is being used, which will foster trust and drive financial inclusion
- Catalyst for reusable ID’s which will deliver efficiency in how people and consumers access goods and services
Open Banking Is Changing the Payments Game, and Enterprises Must Keep Up. What are your comments?
Open banking has the potential to reshape the payments landscape by giving rise to new and innovative payment solutions, enhancing customer experiences, and unlocking new business opportunities. Businesses that adapt to this evolving landscape and harness the potential of open banking stand to benefit from increased customer loyalty, cost savings, market expansion, and improved competitiveness.
What is the future of open banking?
We touched on some of these trends earlier, but to reiterate we are already seeing ‘open banking’ shift to ‘open finance’ and beyond as ecosystem participants like payroll providers, asset managers and ecommerce platforms shift from being not only ‘consumers’ of open banking data but also providers.
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Your predictions for the global financial system for 2024-2025? Is any bubble expected?
In the next few years, we see trends around re-useable digital ID becoming increasingly important for consumer transactions. From a business lens the increasing importance of understanding sustainability/climate-related metrics will become a key aspect in understanding supplier risk. As mentioned previously the need to triangulate core data elements and meta data will also become more widely used to provide not only a seamless user experience but also for the purposes of fraud prevention.
Thank you, Ramesh ! That was fun and we hope to see you back on globalfintechseries.com soon.
[To share your insights with us, please write to sghosh@martechseries.com]
Ramesh Menon is the Group Director of Product Management for the London Stock Exchange Group’s (LSEG) Digital Identity and Fraud business. In this role, he leads and delivers the product strategy and roadmap for an industry-leading portfolio of products spanning account verification, identity verification and digital onboarding for fraud prevention, KYC and KYB use-cases.
Ramesh has held a range of software leadership roles in the past. Most recently, he was the Chief Technology Officer for Global Data Consortium (GDC), where he led the product, engineering, and data strategy teams for GDC’s cloud-native global identity verification solutions. Earlier in his career, he held product management leadership positions at Informatica and business leadership roles at Identity Systems, a division of Nokia Enterprise Solutions.
LSEG (London Stock Exchange Group) is a diversified international markets infrastructure business —earning our clients’ trust for over 300 years. That legacy of customer-focused excellence ensures that you can rely on our expertise in capital formation, intellectual property and risk and balance sheet management.
As global leaders in financial indexing, benchmarking and analytic services, we offer unrivalled access to international capital markets. Our high-performance technology solutions enable companies worldwide to access funds for growth and development. And with our Data & Analytics, Capital Markets and Post Trade divisions, we provide a comprehensive, integrated suite of trusted financial market infrastructure services that help our customers pursue—and achieve—their ambitions.
