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Q & A


something coming up for the 2010s and beyond that says “the sector can be different”.


IBS Journal: What are the major barriers to the adoption of open standards?


AK: From a technical side, there is work that is needed on the technical standards but we’ve seen them before so there aren’t too many insurmountable obstacles. Understanding the impact of the regulatory requirements of things like PSD II and having bodies saying “this is what we want to achieve” – is that going to be a big obstacle? No, I think we just need time to get some clarity. As usual with banking the biggest obstacle will be around the cultural challenges that could exist. When something represents a break from the past people might be anxious as to what their future might look like. That’s only natural and human nature, but we can manage those expectations of people asking “what is open banking?” Some of that cultural resistance often comes in the form of “well, it’s a break from the past and what we’ve always done so I’m not sure that I like it”. I’m not saying it’s a completely open road and we don’t have hills or bumps along it, but it doesn’t feel like a journey akin to climbing Mount Everest.


HT: We all know the challenges and where we want to move to. Banks need to understand where they stand today. They have very complex IT infrastructures with poor oversight and I see that most bank members try to draw pictures of “what we have today” and that is not an easy task – it can take some time. Once they’ve done this they can migrate to a new situation. The technology is there: cloud enabling is not an issue, server-side is not an issue, APIs are not an issue. The technical tools are there but the roadmap and how to move from current to future is the challenge and that depends on the maturity of the organisation and its knowledge about its existing systems.


AK: Going back to the regulatory side of things, we’ve got bodies like the CMA that have spoken about Open Banking. Often in the past, when regulators have spoken banks have held their breath wondering if it’ll be something else that will be a major operational issue. This time it’s a little different as the regulator isn’t


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wagging a finger at the banks, reprimanding them for a misdemeanour or inadequacy. Now regulators are saying “we would like to see a drive towards an Open Banking world because it benefits all parties.” It’s perhaps one the first examples of this new regulatory world where it’s no longer about correcting mistakes of the past and more about looking forward and propelling banks into a new era that is not necessarily about satisfying the regulators but about satisfying their customers.


IBS Journal: Where do you see banking and the adoption of open standards in the next five years?


HT: What I think we will see is increased interaction between different players. This could mean increased interaction between competitors and an opening up and collaboration. We’re seeing this in the adoption of the blockchain, where lots of parties are getting involved in its development. There is a huge focus on APIs – we have our own working group and there is a huge demand for it as all our members participate in it. In five years we’ll see a completely different environment in the industry than what we have today – I can’t really give you specifics but I know that it is coming fast.


AK: If the ambitions that have been set by people like the UK Treasury come true then by 2021 we’ll have had Open Banking standards existing in the UK for around two years. So hopefully, following an introduction in 2019 we’ll see it going fully operational in the 2020s onwards. I think it’s good to have a good opportunity to get the standards right before then. What we’ll see in the short-term is the creation of greater clarity and we’re going to have the banking ecosystem working quietly away on getting things done. There’ll be moments where we, as an industry, can announce something about Open Banking but it will continue to make small strides forward rather than spending time shouting from the rooftops. The steam that is building behind this idea will mean that we see some nice incremental changes over the next five years. It’s onwards and upwards from here, rather than stuttering and sliding backwards.


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