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One Year On: Open Banking in 2019 – Lessons from Providers

On 13 January 2018, Open Banking was launched in the UK with the aim to facilitate a greater number of third-party providers seeking to transform financial services.  This would be done by utilising data to improve the way we manage, borrow, save and invest our money.

Compared to other countries, the UK has to date taken a proactive lead in this initiative and is internationally recognised as having set a gold standard in its establishment of Open Banking.  Several countries also seeking to initiative Open Banking now look to the UK as a thought leader in this space. Around the recent anniversary of the launch, we took the opportunity to speak to providers and leaders in the Open Banking space, to hear lessons learned during the implementation phase and how things have changed and evolved over the last year.

How would you measure the initial uptake of open banking and was it as big as you hoped for?

Jamie Campbell of Bud: “The initial uptick of open banking relied on a number of very large institutions, all with individual technical challenges, hitting a deadline (which happened to be a Sunday). It was always going to be a challenge. I heard it described as trying to get the USA, China and Russia to all land on the moon on the same day….it’s still early days, we’ve only been consuming APIs for a few months, but one thing that is changing is what consumers expect from banks and banking services.”

Conrad Ford of Funding Options: “It’s important to remember that open banking launched just a year ago, and while awareness among consumers and businesses may be lower than the media expected, we are looking at potential adoption figures of 71% of SMEs and 64% of adults by 2022. The real benefits of open banking are yet to be seen.”

James Varga of ID Co: “The attitude of the banks has changed immeasurably. open banking will soon move beyond just current accounts, which is a good thing. We have been here for a number of years, but now the banks are introducing their own open banking products and FinTech’s are emerging and growing at scale. Would I call it a successful 12 months? Yes, absolutely.”  

Caroline Plumb of Fluidly: “There is lots of support and encouragement in existence to help providers and users start to explore the possibilities of open banking.”

Imran Gulamhuseinwala of the Open Banking Implementation Entity (OBIE): “On the one year anniversary of Open Banking, we had over 100 regulated entities enrolled with in-excess of 100 waiting to join. We expect the ecosystem to develop with even greater momentum and pace. Banks have very firmly moved from viewing open banking as a compliance exercise to an opportunity to compete and innovate and we’ve seen some impressive early signs of new technologies powered by open banking – even though we are only midway through our roadmap with lots more to come.”

How can we reassure the public about the safety of open banking and its benefits?

Jamie Campbell: “Reassurance on the safety of open banking is the responsibility of all the actors in the market.”

Conrad Ford: “It will be the banks that will need to lead the way in demonstrating that, with open banking, these levels of security and data protection will continue, and that significant investment continues to be made in developing the highest levels of security.”

James Varga: “The beauty of open banking is that it is far more secure than screen scraping, which is in common use today and barely warrants a murmur. API technology is completely secure and I have no worries about it at all. There were security concerns around contactless payments, but once customers began to enjoy the convenience that it offered, no one asked if it was “secure”.”

Caroline Plumb: “Users can be reassured by the fact that the companies acting as Third Party Providers (TPPs) are FCA regulated and the Open Banking initiative covers users for fraud in many circumstances if they have shared their data with authorised third parties.”

Imran Gulamhuseinwala: “Open banking is designed to give customers even greater protections than they receive today. Only third parties regulated by the FCA (or the relevant NCA) can enrol in Open Banking. Customers can gain further peace of mind by checking if a party is authorised by visiting either the FCA website and/or openbanking.org.uk. Open Banking has been built with rigorously-tested software and security systems that enable customers to share access safely and securely.  This can only happen with a customer’s explicit permission and with their full understanding of how/for how long and for what purpose this data will be used. A customer can revoke their permission at any time. With open banking, you will not be asked for your user credentials, such as your password.”

What does the year ahead hold for open banking and what new innovations are on the horizon?

Jamie Campbell: “This year the scope of open banking will be increasing. Currently, open banking touches current accounts but in 2019 it will extend to ‘transactional accounts’ such as credit cards, e-wallets etc. Now the regulator has allowed banks to create commercial APIs using the same standards and protocols. This will likely create a new revenue channel and possibly a whole new economy based on data sharing with banks at the centre.”

Conrad Ford: “As the banks and third parties launch new solutions, then curiosity will increase as the early adopters among the general public begin to experiment with these new products and services. But it’s not just the consumer or small business that will benefit; the financial sector has the potential to grow as a result of open banking and we are already seeing this.”

James Varga: “There’s much to look forward to in 2019. Open banking is very much focused on current accounts at this time. In 2019, we’ll see it move into credit cards, mortgages and more, and that will only increase the volume of products that are on offer to consumers.”

Caroline Plumb: “The winners of the Nesta Open Up Challenge have just been announced, six companies who will share a £2.5m prize pot to develop their open banking proposition. Funds like this will have a game-changing effect on the next year of open banking. We’ll be excited to see future additional functionality live in the APIs as the roadmap progresses – perhaps improved payments, multi-user authentication and more data sets like credit cards.”

Imran Gulamhuseinwala: “2019 is the year that open banking becomes real. The user experience is going to be improved, with a frictionless experience for customers being introduced, as we move onto mobile. This will make the account information journeys easier and payments delivered with more speed and convenience. There are signs of an emerging dynamic, vibrant and developing ecosystem which is rapidly becoming more sophisticated and expansive in its coverage. This is going to considerably ramp up in 2019. We are also seeing some early and exciting signs of how open banking is powering technologies to help address some of society’s issues, in particular in the debt advice area.”