The era of open banking is upon us. This past October 2017, Imran Gulamhuseinwala, trustee for the Open Banking Implementation Entity in the UK, said: “We are one step closer to delivering the potential of open banking for the benefit of consumers and businesses.”
It’s an exciting time for consumers, as well as startups and software technology companies such as Backbase, and an anxious time for those who don’t know what open banking is, what it implies, and what the future might look like in the medium-to-long-term.
Our thought leadership platform, BankNXT, has published a series of articles that go into more detail, and we’d like to showcase the highlights of a handful of the best.
At the end of October, Nick Cheetham (MD of FINkit) wrote about the opportunities open banking presents for the banking community at large. As he says in his piece, there are genuine breakthroughs to be made:
“For many banks, however, their efforts to innovate through open banking will represent their first experience of putting genuine digital transformation at the heart of their business. Efforts at innovation so far have addressed change very much at the edge – tweaking digital banking apps, for example – as banks have done what they can to put off really difficult fundamental business change.”
The time for putting off advances in innovation, and new thinking in terms of how banking works, is definitely over. Daryl Wilkinson’s frustration reached boiling point in March (and he’s usually quite mellow!) following his hosting of a panel discussion about open banking and innovation at RBI 2017 in London.
“I don’t believe banks are moving fast enough,” he said. “I think that’s a fair criticism. I think they hear the criticism and they’re making the changes, so it’s not like they’re ignoring it. I’m concerned that they’ve kind of lost themselves with innovation labs and design studios, and the PR and facade of being innovative, rather than the substance of doing it.
“The hardest thing about innovation is actually execution. There’s ideas everywhere, so if you’re still in the process of measuring ideas and how many new ideas you have, you’re already losing. You should be measuring your execution of ideas, and how quickly you go from idea to implementation. Fintechs obviously do that a lot faster because they’re smaller beasts.”
You can listen to our interview on the BankNXT SoundCloud page, too.
Will Beeson from Civilised Bank wrote an excellent piece this year about the potential impact of open banking, providing tangible examples of how the concept can be brought to life.
“For the sake of clarity, I define open banking as the trend currently under way towards openness in banking technology, product/service delivery and customer ownership,” he says. “This includes PSD2, the UK’s Open Banking Initiative, other national regulatory changes, as well as strategic/competitive moves by individual organisations to leverage openness to do business better.”
He goes on to reveal a few examples of what open banking, in the strictest sense, is doing and will do. It’s definitely worth a read.
Finally, I wrote an article myself back in March, where I described the analogous train journey of consumer education and open banking implementation. I had heard from traditional bankers that open banking was something the public needed to be shielded from to avoid confusion. I disagree, and think customers need to be educated as to what’s involved. In March, I read a statistic that said 90% of Brits hadn’t heard of the Open Banking Initiative. I wonder what that figure is now?
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