In last week’s Fintech TempCheck we asked some of the leading lights in fintech about the recent roll-out of Open Banking and how it’s coming along. We got a lot of great responses, so we decided to select a couple that really stood out for this week’s Guest Blog.
Louise Beaumont, co-chair of the Open Banking Working Group at TechUK
That six of the nine banks weren’t fully ready for the initial Open Banking compliance deadline is disappointing but not entirely surprising as the January 13 date was always viewed as a ‘rolling start’ to open banking. The six-week testing phase will confirm that the open API implementations that are ready are indeed standard, and thus capable of delivering open banking as the regulator intended.
For consumers, open banking appears to be nothing more than a change of Ts and Cs and a lot of scary looking legalese around the dangers of sharing data with third parties. The communication from the banks to consumers and SMEs has been poor to date, and must improve to genuinely help people understand the opportunities available as the open data future evolves, as well as how to stay safe.
The open future starts here; consumers and small business can now start to benefit from a hyper-personalised environment, with predictive and pre-emptive services that dynamically flex and flow as financial needs change, and all based on the willingness to securely share the data they generate. That is vastly different from the financial services experience to date with monolithic banking products that are mass-marketed at - with no consideration to - the individual.
In a new world built around the smarter use of data, large holders of data such as energy and telco firms, fintechs and the tech titans could deliver financial services either individually or through collaboration. They could anticipate spending patterns and usage, comingle data from multiple sectors to surface and satisfy un-met or under-served needs. Amazon, Facebook and others have a distinct advantage as they are designed with data at their core, with a huge incumbent user base and an ability to be at the forefront of customer engagement - while training us to adopt new services.
Jamie Campbell, head of awareness, Bud
Well so far so... much as can be expected. It was never going to be this time bomb count-down to January 13th. That date was the day the first companies would receive their regulation and gain access to the APIs (Application Programme Interface) from banks and that was the day banks had to aim for to make those APIs available. Only one bank made the deadline: Lloyds.
So let’s talk about what we have learnt so far:
Customer awareness around what Open Banking is, is still low. This is likely down to the unclear explanation from institutions, limited coverage in the build up of the launch and few relatable use-cases in the market. Finance needs to get better at bringing the rest of the population with it as it tries to make radical change.
Finding out who the regulated companies are in the space is not easy. The new licences: AISP (Account Information Service Provider) and PISP (Payment Initiation Service Provider) are what gives third party access to customer data on their request, but for a normal customers, how do they find out who the regulated parties are? Currently it's case by case, looking up the FCA registration number. But if you are looking for a long list of service providers it involves downloading CSVs and cross referencing numbers with names... I did it, it ain’t pretty.
More time is needed. Across the board, time is needed to test the experience of all of these services. Whether it's account aggregation or initiating payments, the only way this is going to make a big impact is if people want to use it. For people to want to use it, it needs to show value (which it does), it needs to be secure (which it is) and it needs to be easy (which, arguably, it isn’t). Time will be best spent getting the customer journeys and value propositions correct going forward.
But, it’s only a few weeks in. As the Open Banking Implementation Entity said, this is a ‘rolling start’. Let’s check back in six months.
You’re a thought leader? Then email us at email@example.com so we can add you to our list and we’ll be in touch.