Open Banking (R)evolution

A government led sea change is happening in the UK banking industry that will challenge the way people currently spend, manage and think about money.  As with any change, there are inherent opportunities for new players to innovate and for new technology to flourish.  For existing financial organisations there is the clear and present danger of ‘disruption’. But will your organisation be disrupted or be a disruptor? When the sea change arrives, will you sink or swim?

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Open Revolution

The UK government has recently published a report focused on an ‘Open Revolution’ in retail banking. It concluded that currently major banks have a lack of competition. New ‘challenger’ banks find it difficult establish themselves, and consequently there is lack of choice for bank customers. Consequently, customers pay more than they should, and are left unable to benefit from potential innovative banking services.

“Open Banking” is the proposed panacea for these issues. The same principles and concepts are also at the heart of the second tranche of the Payment Services Directive (PSD2) being introduced across the European Union.

The government’s stated intention is to revolutionise banking for personal customers. However, the measures will have fair reaching implications for small businesses, retailers and service providers who will all need to change and adapt their payment systems and banking interactions moving forward.  

Suggested Evolution

The government requires the following changes to the industry which will have fair reaching implications:

  • The introduction of “Open Banking” as early as 2018. Advances in technology, such as the growth of the API Economy, facilitate customers securely sharing their information with other banks and new third party vendors.  This will provide customers the option to take control over their funds in multiple disparate accounts potentially through a single simple phone ‘app’
  • Publication of information concerning the measurement of quality of service they provide. This isn’t merely a statistic but real data from customers gathered through the banks’ open banking platforms.
  • Banks will also be required to ‘push’ information to customers. Such event based notifications of, for example, interest rate changes, moving the banks away from current rules concerning publication of such information in newspapers.
  • Also, banks will be required to periodically remind customers to reflect of the value of services they are being provided and compare with competing organisations. This takes  account of the fact that there is no natural renewal point for a bank account, as there is for a motor insurance policy, for example.

Technology is the key

Each of these points has a solution based firmly around technology. The technology and systems your organisation currently has today and new technology it may need tomorrow. All your organisation’s systems will need to be integrated and exposed to facilitate seamless customer service.

With this mandate of greater visibility; regulatory requirements for innovation; and the race for competition, the banking sector will now move forwards at an unprecedented pace.   The ultimate winners will  not be those who merely comply with the regulations, it will be those who develop new solutions, new services, new apps. Those who lead and disrupt.  Indeed, the real winners of this revolution may not even be a bank. They could be third party payment handlers, app developers or Fintech entrepreneurs.

Open Banking Discovery Workshop

With Prolifics’ experience offering scalable, secure solutions based on IBM’s Cloud, Integration and API technology, we can guide you through the government regulations and help you build a solution for tomorrow.

We are offering you the chance to discover what the implications of the Open Banking Revolution are for your organization.  During the session we will cover:

  • Open Banking - what is it and how does it affect me?
  • Implications of Open Banking for IT Systems.
  • Architectural options, including Hybrid Cloud
  • Implementation strategies and timelines for Open Banking adoption.
  • Impact on enterprise IT and how to cope.