Open Banking: Where Are We Now?

In August 2018, a YouGov* survey found that 72% of UK adults have still not heard of Open Banking. And of those that are aware of it, 77% said they wouldn’t share their data with anyone other than their own bank.

The barrier still remains: educating customers that sharing their data using APIs and trusted third party providers is safe. It hasn’t been helped by the growing number of large scale data breaches that have been heavily reported in the media, namely the Facebook/Cambridge Analytica scandal.  However, all of the top nine banks launched Open Banking account aggregation – the ability to view all your accounts with other banks in one place – at the end of March 2019, as per the CMA’s EU mandate.

Where are we now with open banking?

Good news? Maybe, maybe not.

  • Around one-third of UK customers have more than one current account, with the average person now holding products from seven different financial providers**.
  • ‘Viewing’ your accounts in one place may offer no real competitive advantage when you consider the current, limited scope of ‘the big banks’. They still need to offer something compelling and different for the customer, for them to opt in.
  • Customers want to see all of their finances, including savings, mortgages, loans and pensions, be better informed and make decisions that are best for them. So until this happens, the banks will gain very little from purely account aggregation (the ability to ‘see’ all your different accounts in one place).
  • From September 2019, when the full, mandatory PSD2 rules come into effect, banks will need to support access for all electronic payments and payment types (i.e. direct from account to account) alongside their existing digital offering, and make the journey less clunky and (most definitely) more mobile-friendly.
  • This will hopefully offer customers competitive propositions via their own bank – something which they trust just that little bit more than sharing their data with a third party. And banks will have to comply, too; not just legally but in order to compete with FinTechs and innovative new start-ups, which are all too willing to occupy this space.
  • Technology is enabling consumers to take more and more control of their own finances, resulting in traditional banking relationships becoming purely functional, if they’re not careful.

For this to happen, the large banks need an organisational mindset change, as well as technical advances which should be prioritised alongside existing digital transformation programmes.

Banks have one distinct advantage: they hold customer data. Now is the time for customers to see the benefits of sharing their data, safely, to make better informed financial decisions for their futures.

*YouGov 01 Aug 2018 “Business & Finance” Customer Research


Jo Deverill-Slade

June 21, 2019

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