Dr Anthony Evans, Founder of Open Banking Delivery, discusses a pioneering project which aims to use the techniques of Open Finance to drive financial inclusion for small farmers

In the five years since Open Banking went live in the UK, we have seen many interesting use cases emerge. We are also now seeing early adopters using Open Finance and Open Data in innovative projects around the world. Yet we do not often hear about true Open X use cases – which is one reason why my new project is so exciting. 

At the beginning of April 2023, I travelled to Chile to spend three weeks exploring the potential of Open Banking techniques and technology to improve the lives of rural farmers. Our project focuses on addressing issues around financial inclusion and enhancing financial services for farmers. This will primarily involve increasing the availability of loans and grants, as well as unlocking opportunities to increase their margins on produce. Additionally, the initiative ties in with regenerative farming practices. We want to enable farmers to access sustainable projects such as carbon capture, power generation, and water quality improvement. 

Importantly, this is a rare and pioneering example of a true Open X use case. The investigation is taking place in Chile but has the potential to have a global impact. 

The Journey to Open X

Open X can happen in two ways. The less disruptive path involves taking existing Open Finance capabilities and creatively fashioning them into new use cases which address a wide range of industries. The other, more disruptive way involves using API frameworks to introduce interconnectivity into other industries. This creates interoperability between ecosystems and is much closer to proper open access, which is what we’re hoping to achieve in Chile. 

The message we will promote is that initiatives like this allow banks to start making money by directly addressing financial inclusion. In the longer term, there will be high volumes of payments within these new use cases across multiple industries, creating a clear opportunity for banks to place themselves back at the top of the value chain by facilitating and providing services. 

We are developing techniques and solutions as we identify and explore specific use cases. For example, microfinance is an area that requires attention, and I will be exploring ways to integrate multiple microfinance initiatives, which is an approach that is currently lacking in many Open Banking ecosystems. 

Financial Inclusion in Chile 

This project arose from a meeting with the Chilean trade delegation in London. We were asked to help small and medium farmers access funds and projects which grant subsidies and fundings through green investments, carbon offsetting and other sources. Currently, small farmers are effectively locked out of these schemes due to high costs, meaning that only large farmers are able to access these types of funding.

Our primary objective is to scope out the requirements for a pilot system in Chile and identify regional government funding which will allow us to deliver this project. Our aim is to create a solution that is compatible with the Chilean Open Finance standards – which have not yet been completed and published – and implement Open Banking-style payments as well as API-driven sustainability reporting. We will also be looking at kiosk banking.

The communities our research focuses on are involved in regenerative farming, which aims to improve soil health, increase biodiversity, and drive ecological resilience. Although regenerative farming reduces the negative environmental impacts of industrial agriculture such as soil degradation, water pollution, and carbon emissions, it also leads to a drop in productivity – especially for smaller farms with low margins. 

We are now conducting research to properly identify the needs of farmers and design financial services that meet their requirements. We are also working to identify the new ecosystem’s detailed requirements and use cases, collaborating with a network of highly skilled individuals from various universities and industries to address any technical aspects that may arise.  

Collaboration and Innovation 

During our investigation in Chile, we have been speaking with representatives from banks, fintechs, government and regulatory organisations. We arranged a crucial meeting with Asociación de Bancos e Instituciones Financieras A.G – the Association of Banks and Financial Institution – which is a very powerful and influential organisation in Chile. Additionally, we met with Banco Central de Chile, which is the Chilean central bank, and regional authorities in Chile, which have strong autonomy and funding capabilities to pilot projects within their regions. We also arranged meetings with the Inter-American Development Bank (IDB) which is the main source of financing for sustainable, social, economic and institutional development in both Latin America and the Caribbean, and CAF, the international development bank for Latin America.

Our project has the potential to address multiple important issues such as open ecosystems, financial inclusion, microfinance, and sustainability. Ultimately, this investigation will extend beyond Chile to other regions such as Africa, India, and Cambodia to identify initiatives that can enable effective microfinance integration. We are currently exploring the feasibility of conducting a separate pilot project in the UK, with the Philippines as a possible third location.

It’s a very exciting project that ticks so many boxes, from open ecosystems to financial inclusion and microfinance to sustainability. Open Banking unlocked financial data. Our project shows how the techniques and technologies pioneered in financial services can address other industries and help tackle a wide range of social and environmental challenges.