UK: Open Banking initiative kicks off

The first stage of the Competition and Markets Authority’s Open Banking initiative, a project that aims to enhance consumer choice in how they manage their finances, launched last week. The initiative plans to increase consumer choice and boost competition by giving consumers access to the technological advances that have emerged in the finance industry in recent years, but are often provided by smaller players who are unable to compete with the larger, established banks. With RFi Group data showing that 65% of consumers consider RBS Group, HSBC, Lloyds Group or Barclays to be their main bank, if these changes succeed in their aim of increasing competition they could seriously shake up the industry.

The initiative plans to increase consumer choice and boost competition by giving consumers access to the technological advances that have emerged in the finance industry in recent years, but are often provided by smaller players who are unable to compete with the larger, established banks. With RFi Group data showing that 65% of consumers consider RBS Group, HSBC, Lloyds Group or Barclays to be their main bank, if these changes succeed in their aim of increasing competition they could seriously shake up the industry.

The first stage required banks to share generic data about the bank and their accounts, including the location of branches and ATMs, specifications for each current account (such as required monthly deposits) and requirements for business accounts. Nine banks must comply with these requirements by the end of March, including HSBC, Lloyds Group, Barclays and RBS Group.

Application program interfaces (APIs) will be created during the second stage of the Open Banking initiative. Planned for implementation in early 2018, the second stage of the Open Banking initiative will allow APIs to be used by third parties to receive access to consumer’s transaction history and initiate payments from their accounts, provided the consumer gives their consent.

The final stage of the open banking initiative, to be implemented by Autumn 2018, will require banks to meet certain service quality metrics and develop commercially viable APIs. Banks are expected to partner with fintechs to help deliver this last stage.

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