A year ago we were told ‘Open Banking is about to change the way we bank forever’.
A year on….and we’re questioning: ‘what’s the holdup? Where is Open Banking?’
Just 1 in 4 people have heard of it, and only 1 in 5 of those people actually know what it means*.
So, it’s no surprise with such limited understanding that we’re not all shouting from the rooftops about the latest digital disruptor in banking. But are we wrong to ignore it? The likelihood is… YES!
By ignoring it, we could be missing out on better mortgages, cheaper household bills, better control of our own direct debits and extra spending advice.
The government-backed initiative launched just over a year ago and enables us, as customers, to log in to just one app, and have access to all our loans, credit cards, current accounts, and spending habits—even if those span across multiple banks.
PWC are predicting it as one of the biggest disruptors to traditional banking – with 33 million of us expected to be signed up to Open Banking by 2022.
It relies on your bank sharing your current account data with regulated third-parties, and for it to work properly the more banks that sign up, the better. So, understandably, this has been met with reluctance from people who don’t want to share their spending habits with companies they’ve never heard of.
But surely giving up our spending habits is no worse than the Sainsbury’s and Tesco Banks of this world using our store loyalty card data to work out if buying avocado each week makes us a safer person to lend to? At least in this case the extra information could open doors to greater financial inclusion and more affordable, competitive loan services.
By giving up our data, challenger banks, fintech firms, and tech companies are forced to come up with more competitive deals for products like mortgages, overdrafts and insurance. All tailor-made around our newly available financial data.
So could this be the end of us trawling the internet for the best deals …. Instead we sit back while the companies battle for our custom?
The big names are on board – Barclays, HSBC and Santander are just 3 who have adapted their apps to include financial data from your other banks. And the fintech-savvy digital-only banks, like Monzo and Starling, are embracing it even more – allowing customers to choose from a range of products that can be integrated in to their existing accounts (e.g. Pension Bee to view pension balances). Debt management services are next; fintech companies have already started approaching credit score agencies to use the data to benefit the consumer by increasing levels of financial inclusion with debt management.
So is it just us, the consumer, who is lagging behind?
Is it time for us to realise that this isn’t just a gimmick, it’s the future. It’s dynamic, it’s disruptive, and it could really benefit the consumer.
The big question is, are we ready for this transformation?
*Source – Splendid Unlimited survey