For ‘open bank­ing’ era

The Sunday Telegraph - Money & Business - - Business -

Cus­tomers are given the key to their own fi­nan­cial data as part of the re­forms – but a study sug­gests few will be will­ing to share the in­for­ma­tion own­er­ship of cur­rent ac­counts that was king, now its own­er­ship of data,” In­gram says.

Mo­bile app bank Monzo, which has some 500,000 users af­ter a year of rapid ex­pan­sion, be­lieves the re­forms could help it grow even faster this year. “If it works well it could help a start-up get five to 10 mil­lion users in a year. Of course we’d love that if it can be us,” Monzo founder Tom Blom­field says. “It’s an in­cred­i­ble op­por­tu­nity.”

For­rester’s Mor­gan thinks Sil­i­con Val­ley tech gi­ants may also en­ter the fray. “Ama­zon is by far the big­gest threat in our eyes,” he says. “They hold a lot of cus­tomer data and they are al­ready pro­vid­ing loans to small busi­nesses.”

High street re­tail­ers and gro­cers are also likely ben­e­fi­cia­ries, with chains queu­ing up to of­fer ser­vices like faster re­funds by bank trans­fer and in-store ac­cess to bal­ances.

Ac­cen­ture re­search last month found a third of big UK re­tail­ers would be ready to plug in to banks by the time Open Bank­ing launched, in­creas­ing to 90pc by 2019.

It would be pre­ma­ture to say the UK’S in­cum­bent banks face an un­stop­pable wave of change.

Two thirds of con­sumers in a sep­a­rate Ac­cen­ture sur­vey said they would not share their fi­nan­cial data with a third party come the launch of Open Bank­ing. And more than half said they would never change how they banked.

Their ret­i­cence comes partly from se­cu­rity con­cerns af­ter high-pro­file cy­ber at­tacks that have com­pro­mised both ma­jor com­pa­nies and the data of other or­gan­i­sa­tions, such as the NHS.

This week, con­sumer groups Which? and Get Safe On­line warned that the On­line Bank­ing re­forms could heighten the risk of cus­tomers fall­ing prey to scams if they were not vig­i­lant.

But Gu­lamhu­sein­wala in­sists that “se­cu­rity has been built at the heart of what we’re do­ing”.

Cus­tomers who want to take up a deal at a ri­val lender should be redi­rected to their ex­ist­ing bank’s web­site in or­der to give per­mis­sion.

Be­hind the scenes your cur­rent bank would check the third party is au­tho­rised to ac­cess the data against a cen­tral reg­is­ter con­trolled by Open Bank­ing.

This sys­tem would ei­ther block or ap­prove the data trans­fer, then re­di­rect you back to the com­peti­tor’s site if all was well.

“No cus­tomer has to use Open Bank­ing and they will never be re­quired to share their user­name and pass­word with another bank,” Gu­lamhu­sein­wala adds.

Cus­tomers should be given the op­tion to switch on or off per­mis­sions for third par­ties to ac­cess fi­nan­cial data held by their bank, sim­i­lar to the per­mis­sions sys­tems of­fered by most smart­phones.

A cus­tomer re­dress sys­tem will also be of­fered by Open Bank­ing should con­sumers have con­cerns their data has been com­pro­mised.

Monzo’s Blom­field de­scribes data se­cu­rity as “mas­sively” im­por­tant. “It’s as im­por­tant as the money, they are now ba­si­cally equal,” he adds.

Si­mon Paris, deputy chief ex­ec­u­tive at fi­nan­cial in­fra­struc­ture firm Fi­nas­tra, which has been work­ing with banks to pre­pare them for the changes, be­lieves cus­tomers will quickly be won over.

“What peo­ple don’t re­alise is how wide-reach­ing the ben­e­fits of Open Bank­ing may be,” Paris says.

“It has the po­ten­tial to re­move bar­ri­ers and cre­ate com­pletely fric­tion­less move­ment be­tween pay­ment and ac­count in­for­ma­tion, which could im­prove ser­vices from credit rat­ings to mort­gage pay­ments to util­ity bills.”

What’s clear is tra­di­tional banks can no longer af­ford to be com­pla­cent. They have a fight on their hands to keep cus­tomers loyal and must of­fer bet­ter deals. The ul­ti­mate win­ners should be con­sumers.

‘If data is the new oil, pay­ment data is the best qual­ity oil out there. It stands to rea­son a host of new providers want in’

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.