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NEWS
HSBC to spend $2.1 billion on core banking and digital upgrades
A
s the twin perils of challenger banks and further European government regulation bear down on the UK banks,
HSBC is answering the threats with a new wave of digitisation and mobile apps.
Ironically, HSBC is using one of the tools the challenger banks have been using as a weapon against the “old established behemoths” – the Application Programming Interface (API) – to its own advantage.
HSBC has designed an application that uses APIs to aggregate bank accounts in one easy-to-use place using the power of new legislation that threatens to weaken the established lenders’ customer relationships.
Early next year, HSBC will be the first high-street lender to launch an app that allows customers to see all the accounts they hold with all of their banks — in one place.
HSBC plans a lion’s share of the open banking market
The move is aimed at placing HSBC at the centre of people’s financial relationships, acting as a hub through which customers can manage all their accounts and spending habits.
The Payment Services Directive 2 (PSD2), legislation demands that all banks provide open access to all of a customer’s data — as long as they give their consent — in an attempt by the European regulators to enhance competition between the banks and break the logjam that exists because customers are reluctant to move between banks at the present.
The regulators think that by making the process of banking more transparent they can stimulate customers to move more often and be more adventurous in their banking habits and relationships.
Third party information in your hand
Third parties, such as new banks and fintechs, will be able to use the data to provide tailored financial services to customers. The UK’s Competition and Markets Authority last year also informed banks that it would make banks open up their data under a general standard which it called “Open Bankin”.
The EU General Data Protection Regulation (GDPR) is another piece of legislation that is seen as regulation by some in the
industry but a huge opportunity to improve customer service levels by others, while complying with the new law.
Talking to IBS Intelligence, Richard Cooper, vice president of global financial services technology provider, FIS, said: “The financial industry still has much to do to prepare for GDPR’s May 2018 deadline. Financial institutions that view this as an opportunity to modernise and speed up the process of getting new customers on board will have a big advantage as they will be both more secure for customers – something the banking regulators are very keen on given recent data breaches – and able to better use the data they collect to help customers make better choices.”
HSBC has said the app would allow customers to add accounts from up to 21 different banks including the likes of Barclays, Santander, Lloyds Banking Group and others. Customers will be able to view their loans, mortgages and savings in one place.
This is very much what recently-launched app-based banks, such as Monzo and Starling, have been doing. However, the big banks have far more bandwidth and a capacity to execute, which could surprise the upstart banks.
www.ibsintelligence.com | © IBS Intelligence 2017
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