Open Banking opens for business
Written by Peter Walker
The Open Banking Implementation Entity (OBIE) has confirmed its Managed Roll Out programme has successfully proven the account data access functionality of the Open Banking system, so FCA-authorised third parties are now able to offer products based on it to customers.
However, as regulated companies have focused on the data capabilities of Open Banking, a statement explained that it has not been possible to test the payments functionality to the same degree, so new payments-focused services will still be put through extensive proving as they engage with the system.
Imran Gulamhuseinwala, trustee of the OBIE, said since the Managed Roll Out was launched on 13 January 2018, the system has refined the system to the point where “we can be entirely confident that we can now give consumers and businesses real control of their financial data”.
The OBIE has also created a new service for companies coming in to the Open Banking ecosystem. ‘Launch Support’ will provide an end-to-end guidance service for third parties to ensure that they are helped to go live, from obtaining the appropriate regulation to connecting to accounts.
A survey of 2,000 UK consumers in February by Crealogix UK found that while half of UK Millennials would like to have all their financial information on one mobile app, 71 per cent of over-55s do not believe there is any element of Open Banking they will use.
The main problem revealed by the research was that over 85 per cent of consumers had either never heard of, or were unsure what the Open Banking initiative was, and how it will affect them.
Lu Zurawski, consumer payments practice lead at ACI Worldwide, commented that the end of managed roll-out represents both a milestone and a wake-up call for the whole banking sector.
"This might not generate huge excitement with the Great British public, but the fully operational Open Banking system will open the door for more rapid deployment of innovative products and offerings that will evolve in line with emerging consumer demands and preferences," he stated. "In this post-incubation period we’re going to start seeing new entrants and third-parties introducing schemes and products to get ahead of their competition."
Zurawski added: "Make no mistake, this new banking ecosystem will evolve quickly and it is as much a threat as it is an opportunity for financial institutions."
Open Banking, or the Second Payment Services Directive, forces the UK’s nine biggest banks - HSBC, Barclays, RBS, Santander, Bank of Ireland, Allied Irish Bank, Danske, Lloyds and Nationwide - to release data in a standardised form, so it can be shared more easily between authorised organisations online.
It is the retail banking industry’s response to the UK government’s request for fairer, more transparent banking and financial services, and follows the Competition and Markets Authority investigation into the supply of current accounts and banking services to small and medium-sized enterprises.
The OBIE was tasked with delivering the application programming interfaces (APIs), data structures and security architectures that make it easy and safe for customers to share their financial records.