Open Banking ‘will start a consumer finance revolution’
Written by Anthony Strzalek
Open Banking regulation will herald a consumer finance revolution, opening up the market to new challenger banks, research from Deloitte suggests.
Rapid technology advancements, regulatory changes and consumer demand will result in a dramatic overhaul of traditional banking models in the next decade, according to the business advisory firm.
New British and European Open Banking rules which come into effect in January 2018 will give new market entrants, such as challenger banks and FinTechs, access to the same data as incumbents.
This is expected to level the playing field when it comes to making investment and lending decisions. These regulations coincide with the development of new technology that allows developers to incorporate third-party data and services into their applications.
More than half (58 per cent) of consumers with mobile banking say being able to complete more banking-related actions through their app would be an important factor in persuading them to switch to a mobile-only bank.
Additionally, 49 per cent said they would trust a mobile app from a digital payments provider for managing their financial accounts and services, while 43 per cent would trust a mobile app from a traditional retailer.
Neil Tomlinson, head of UK banking at Deloitte, commented: “A range of FinTech and non-bank entrants are already offering services that directly compete with incumbents. Open Banking could ultimately challenge who owns the primary customer relationship. Competition is also raised when personalised comparisons between providers are made clearer. However, whilst the threats are greater than ever for banks, so too are the opportunities.”