Early 2018 will mark the beginning of a new era for the UK’s retail banks. The Competition and Markets Authority’s Open Banking order require the UK’s nine largest banks (the ‘CMA 9’) to allow their customers to grant third parties access to their customer data, ranging from product prices to individual transactions and initiation of payments.
Described by the Government as “technological revolution will give people greater control over their money”, Open Banking is intended to transform the relationship between banks and their customers by introducing competition to the banking market.
Using the Open Banking API, new entrants and smaller players will have a structured and secure way to access customer account information and challenge the established institutions by creating new customer offers.
Next generation money management
There are obvious applications for this new platform, such as personal “Wealth Management” apps that work across multiple accounts from different banks, as well as much more efficient price comparison offerings, however, it’s difficult today to predict the kind of truly innovative services that Open Banking could unleash. When the very first apps appeared on smartphones over a decade ago, few could have predicted the resulting explosion of innovation that led to the creation of a global app economy worth over US$40bn in 2016 . The creation of open developer platforms in the smartphone arena kick started a revolution.
By providing a stable and platform for innovation, Open Banking will similarly spark a wave of innovations designed to give customers new ways to manage their money. Perhaps the key element of the new platform is its ability to separate traditional banking infrastructure from the new innovative offerings. This approach will allow innovation and potentially a number of failed initiatives, whilst ensuring that at its core, banking and therefore your money remains on a safe and stable platform. We are at the heart of the CMA’s Open Banking working groups including ‘Consent and Data Privacy’ to drive the public understanding and consent needed to unleash a customer revolution in banking.
The countdown has started
2017 has seen the key pillars of the coming regime put into place. Earlier this year the CMA 9 banks began to offer access to information such as ATM and branch locations. At the end of July, the UK’s national innovation foundation Nesta selected twenty fintech startups to experiment with the Open Banking APIs.
The technical architecture for the new regime is coming together. But perhaps the biggest challenge on the road to Open Banking and a new era of customer-centric banking is still to come: educating customers about what they can gain by ‘opting in’ and consenting to have their data shared.
To understand more about the implications of Open Banking and other key initiatives for the banking sector such as PSDII or GDPR, contact me on email@example.com