Open Banking Excellence: How Fintech is Funding Positive Change

For a long time, the world has been aware of climate change and the need for specialised forces to help the underserved in society. Though it has taken a while, positive change is finally starting to take place, having used the pandemic as a catalyst. Fintechs especially are starting to use their technology for good, creating more opportunities to support charities and help the environment.

Helen Child is the co-founder of Open Banking Excellence. Having been in the payments and finance space for nearly two decades, Child has a wealth of experience and has seen a shift as more companies have altered their priorities to fit in with the current times: a time where climate change and equal opportunity for all is of paramount importance. She spoke with The Fintech Times to delve into how fintechs are helping companies enable this change:

Helen Child, CEO and co-founder of Open Banking ExcellenceHelen Child, CEO and co-founder of Open Banking Excellence
Helen Child, co-founder of Open Banking Excellence

Open Banking has enjoyed an astonishing growth trajectory in recent years. More than 2.5 million UK consumers and businesses now use the services offered by providers in the sector, with the API call volume increasing from 66.8 million in 2018 to almost six billion in 2020 and Accenture analysts predicting that the addressable market to grow to $416billion in the next three years.

However, if this success is to continue, the industry must focus on collaboration. By working together and building connections, Open Banking companies can maximise their impact and growth. Yet collaboration may also bring other benefits which help to solve problems in other sectors and wider society. At Open Banking Excellence (OBE), we believe in karma and giving back, which is why we’re so excited about the pioneers using fintech for good.

One important opportunity for driving positive change through collaboration lies in the challenge of assisting the charity sector in its recovery from the pandemic. During the past year, many charities have been pushed to a “cliff-edge”, with lockdown estimated to have caused a £10billion funding shortfall in the sector.

The pandemic hit amid a wider societal change. The rise of a cashless society means people are becoming less and less likely to carry small amounts of spare change, let alone wads of banknotes, meaning fewer pound coins or larger donations are being dropped into collection jars. Social distancing has made door-to-door collections or in-person fundraising events unfeasible for more than a year. Charities need new ways of accepting donations, whilst donors require innovative, straightforward methods of pledging money. Which is where fintech companies can help.

Learning From Captain Tom

A major lesson about modern charitable payments can be learned from the most prominent fundraising event of the past year, which should serve to inspire and educate about the future of giving.

Captain Tom Moore became famous around the world when he set out on an epic bid to raise money for the NHS by walking 100 laps around his garden before his 100th birthday. He used the website JustGiving to accept donations and payments, allowing people around the world to easily pledge money to support his cause. All in all, he raised £33million.

JustGiving is not necessarily a fintech firm, but the success of this incredibly successful online fundraising drive contains an important truth. Just like any payment made today, donations need to be fast, frictionless and easy to arrange. Without a great donations framework in place, would Captain Tom have raised as much money?

Donations 2.0

The fintech sector is not short of ideas on how to make the process of making payments run more smoothly – and some of these innovations are already being used in the charity sector. Open Banking Excellence collaborated with the open finance and payments platform Moneyhub to create a new way of donating money to charity. The Charity QR Code is a demonstration of the ease of Open Banking and allows you to make a difference in less than 60 seconds.

This collaboration resulted in the creation of an innovative donation system that allowed donors to use a QR code to easily send money to MyBnk, which offers financial education to young people; SSAFA, the armed forces charity, and EACH, East Anglia’s Children’s Hospices. All donors need to do to pledge cash is scan the QR code and the money is moved from their bank and right into the charity’s accounts.

Samantha Seaton, CEO of Moneyhub, said: “Charities once relied on cash donations, but today technology is needed to make sure the funds keep flowing. QR payments are just one way of making the donation process fast, simple and effortless. We’re excited to see what ideas other fintech businesses will pioneer using our open banking technology to help make donating money to a good cause as straightforward as sharing a post on social media.”

Another fintech innovation that can help charities is round-up transactions. Many savings apps now incorporate a feature that can automatically add money to saving accounts every time a purchase is made by rounding up the transaction to the nearest whole number and banking the difference. This same process is now being applied to charitable donations.

Revolut is one of the most prominent companies which has introduced a round-up feature for donations, allowing its users to easily double, triple or quadruple their payments. Charities get 100% of the money and users can pledge cash to the WWF, Save the Children and others. The effectiveness of round-up services also reflects some of the core missions of the wider fintech project, removing friction and using smart automation to make the donation experience into an effortlessly smooth, set and forget process.

Financing Change

The collaboration between charities and fintechs is linked to a wider trend. We’re now seeing a change in the priorities of investors and businesses alike. Sustainable investing is a growing market that is set to boom, with its importance demonstrated by JP Morgan Chase’s decision to buy OpenInvest – a Fintech startup dedicated to ESG investing. The global assets managed in ESG funds also hit a record high of almost $2trillion (£1.45trillion) in the first quarter of 2021, according to a report from Morningstar.

Put simply, the new world that’s being born today is thirsty for businesses that can help bring about positive outcomes as well as generating profits. It’s a great opportunity and a big challenge for fintech. Change is no longer spare, but everywhere.