Historically, the personal finance sector was slow to adopt new products and services for consumers due to their strong position in the market. The CMA enforced mandatory participation for the UK’s nine largest banks and building societies in an effort to create stronger competition and a better deal for consumers through the power of new digital services.
This is being implemented through the Open Banking application program interface (API). The API grants approved third-parties with access to financial archives and customer transactions - without this in place, it’s unlikely so many FinTech start-ups would have been able to quickly generate the trust required to process such sensitive information.
Aside from aims to stimulate collaboration in the sector, Open Banking also prioritizes consumer protection and control within its digital transformation strategy. Without such protections in place, development can often outpace the speed of regulations, as highlighted by the many data-abuse scandals hitting social media platforms.
However, with Open Banking the Financial Conduct Authority (FCA) has ultimate control over which third-parties have permission to use the API and consumers are given fairer rights and better transparency around the use of their data, including the right to revoke third-party access at any time.
Since the frameworks were launched, there have been a number of changes from early adopters of the technology. Let’s take a look at what the last 12 months of Open Banking has delivered so far.