Open banking, the new initiative threatening to tear up the banking rule book, has the power to revolutionise how people manage their money.
For the first time, customers will be able to give companies other than their bank access to their financial data, opening retail and business banking to fresh competition and delivering more choice, value and confidence.
UberRecent coverage has focused on the implications for customers, but they are no less meaningful for the banking industry. For banks whose business models are built around closed systems where the value of customer data is held by them and them alone, open banking has the potential to wrestle away their control of the market.
That could be great news for fintechs and other technology firms. Data is the fuel that will power their technology engines and open banking could be the tipping point they have been promising their investors and potential customers.
The parallels with other industries that have been transformed by new customer data-driven technology may seem obvious. Examples like, CrowdCube or DueDil offer a potential glimpse of the future for open banking, but there’s one big difference: consumers are happy to share information about their musical tastes, or to give their mobile number and payment details to Uber. But will they consent to provide access – albeit in a controlled environment – to their financial data?