Ruth Milligan
Head of Financial Services and Payments, techUK
To succeed, Open Banking needs to incorporate the expertise, the needs and above all the enthusiasm, of all players in the game.
Open Banking and the Second Payment Services Directive (PSD2) is a revolution in payment systems which will fundamentally change the way we make payments and organise our financial lives. The EU law, the PSD2 will be implemented in January 2018. It allows regulated providers, such as banks or third party providers (TPPs), to link up with an individual’s current account and make payments or provide comparison services using the account’s payment history. This may not sound very exciting, but the principle of it is: connecting data through technology.
“This will fundamentally change the way we make payments and organise our financial lives.”
Today, technology can use data in ways never before possible, making tech fundamental to financial services. Over the next decade, it will radically alter what is possible in financial services. It can renew and revitalise the number and type of products and services available as well as the business models behind them.
Payments is only the first step
If Open Banking is a success, it heralds the way for more connectivity across financial services to include loans, mortgages, insurance, pensions, savings etc. So instead of financial dealings being segregated into boxes that don’t communicate, technology will allow different services to talk to each other and be balanced to optimise financial health. This will benefit whole communities – from low to high income consumers, from sole traders to larger SMEs. It is essential that we get this first – payments – step right.
There is potential for interconnectivity between loans, mortgages, insurance, pensions, and savings etc.
Doubts can often stand in the way of technological advances and there are absolute requirements: security is paramount; full consumer consent to view and use data must be assured; the General Data Protection Regulation (GDPR) must be complied with. To overcome doubt all parties must understand each other through clear and open dialogue.
The voice of tech is a key component
The way to overcome doubt is for all the different parties involved to listen and understand each other through clear and open dialogue. At techUK, we see huge opportunities for data to be used to improve financial services through cooperation and collaboration of incumbent and new players. This need not be a game of winners and losers: all can benefit if we work together.
Much is currently being asked of the financial industry and 2018 will be a testing year. We can make it a breakthrough year by working together.