The 13 January 2018 saw open banking come into force in the UK, so one year on, is it achieving what is set out to achieve and what has its impact been?
Open banking was implemented to foster innovation, competition and level the playing field, particularly for start-ups as incubators for innovation. It was hoped it would lead to more and better products to help people manage their finances. As a futurist who views us as on a path to a ubiquitous world of data and data mobility, open banking felt like an introductory act, or precursor to a more profound shift in the products and services of all industries, founded on exploiting data portability and analytic prowess.
That view seems to be reflected in what appears to have been a slow start. To mark the anniversary, the Open Banking Implementation Entity (OBIE) reported that there are 100 providers with 17 third party providers live with clients. Notably, this is just below double the stats reported in July, suggesting early pace and enthusiasm from pioneers keen to exploit the open banking opportunity has slowed.
Of course, open banking was never likely to revolutionise an industry over night. It was never given a chance of a stratospheric rise given the lack of advertising designed to propel it into public awareness and I doubt you’ll find a printed copy of PSD2 on many a coffee table. A YouGov survey in August found that 72% of adults had not heard of open banking. The Government also kindly confirm 17.3% of people work in banking, finance and insurance, so you get a sense of the level of penetration achieved into 10% of the non-financial services, public mind. Data security concerns, whether unfounded or not, was always going to subdue engagement beyond the early adopters.
I think open banking has made a solid but unspectacular start. I’m mindful that ‘not everything that counts can be counted, and not everything that can be counted counts.’ The stats cloud the excellent apps that have been created like Moneyhub, Yolt, Moneyinfo etc. that are giving people greater control over their financial life and offering excellent analysis and nudge features to guide them toward a better outcome. HSBC, the largest bank in Europe launching Connected Money, suggests it views open banking as here to stay and part of the future.
Open banking is the equivalent of planting an acorn. We need to be patient in the belief it will continue to grow into something very important – a connected eco-system. It is a precursor to an inevitable future where open banking evolves into open everything and any data point can be shared, allowing brands across any industry to nudge me and design and product or service tailored to me as a segment of one. Open banking is carving the tough path through which others will follow.
