IBS Journal November 2016
EDITOR’S NOTE THE OPEN BANKING REVOLUTION IS NIGH
MOST UK CURRENT ACCOUNT HOLDERS ARE STEADFASTLY REFUSING TO MOVE PROVIDERS, DESPITE INCENTIVES WORTH UP TO £220 BEING OFFERED BY FIS. PLAN A, THE CURRENT ACCOUNT SWITCH SERVICE (CASS), HASN’T WORKED. IT’S TIME FOR PLAN B
Senior Editor Scott Thompson
contribute to their research on how the top 10 UK retail banks are attempting to create a more competitive customer experience. This highlighted that they are way behind retailers on the road to success. My response? “I don’t think anyone will be surprised by this finding. Unlike retailers, the big UK banks still do not feel enough pressure to compete on price or quality, despite the creation of CASS, mid-sized competitors such as Santander and Nationwide Building Society growing market share and the emergence of digital-only challenger banks and FinTechs. The Competition and Markets Authority (CMA) has called for an Open Banking revolution and that could well break down the many barriers which have made it all too easy for incumbents to hold onto their customers. Many customers feel frustrated with their banks and taken for granted but at the same time they don’t see any viable alternatives out there. Open Banking APIs are, in my view, the way forward in terms of raising awareness about product innovation and service differentiation.”
I
The £750 million CASS, which ensures switching accounts will take no more than seven days, recently marked its third anniversary. There are 65 million current account holders in the UK. But despite millions of pounds being thrown at the initiative, movement has been minimal. Bacs, which runs the service, has facilitated just over three million switches since launching.
Cue yet another media blitz to boost awareness, but by this point there should be some recognition that the initiative isn’t working. In an interview with IBS Journal earlier this year, Tom Blomfield, CEO and Co-founder of mobile
Scott.Thompson@
ibsintelligence.com
05
was recently asked by BookingBug to
challenger bank, Monzo, said: “The switching process is automated but the account opening process is like pulling teeth; you go to a bank and you have to fill in dozens of forms and wait weeks for anything to happen…CASS is like a weird mechanical solution to a problem that is driven by lack of competition.”
The need for open access in all areas of financial infrastructure is therefore greater than ever. Open Banking legislation and the revised Payment Services Directive (PSD2) means banks will soon be required to share data with third parties. A couple of months ago, the CMA published the final report on its retail banking market investigation, requiring banks to implement Open Banking by early 2018. Whether you are an incumbent or a new entrant, you will be able to take advantage of a new, open marketplace. What’s not to like?
There are, of course, barriers to overcome, including security and customer trust issues. And there are concerns about how to reach a standard API, enabling FinTechs to connect to them all. Brexit has also muddied the waters, although it appears that the UK’s banks are pressing ahead with their PSD2 compliance plans regardless.
But the fact that we are talking about this at all means that the revolution is now an inevitability rather than a possibility and, perhaps in the very near future, we could find ourselves on the precipice of an open data world, forcing banks to work harder to earn consumers’ business, no longer protected as ‘too big to fail’. Wouldn’t that be grand?
www.ibsintelligence.com
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52
