[ Features ]

Author: Ross Butler
Written on: 21 January 2020
Last updated: 22 January 2020


finance, London, Regulation, fintech

Britain's "Open Banking" revolution

Britain was the first-mover in this global banking revolution. It is now helping other countries follow its lead.

Open banking is such a simple, big idea: it is a secure way to give service providers access to your financial information. Since the start of 2018, UK banks have been required to share your financial data, at your request, with other businesses. These might be fin-techs with cool apps, challenger banks, or companies completely outside finance, like retail, entertainment and internet giants.

In other words, the market for banking services has been blown open for anyone to compete in.

The UK consumer and small businesses are now being offered innovative new services unavailable anywhere else in the world.

Want to see all your money on one dashboard, no matter where the accounts are held – savings, current, mortgage, ISA – and move funds at a swipe? Or want an app that scans your statements to automatically compare your payments with the latest deals on household bills, to cancel unwanted subscriptions, and track payments? Then head over to Bean.

Want to round up your daily coffee and put the difference into your ISA, Moneybox can do that automatically.

Mortgaged to the eyeballs? Then try Trussle, which intelligently assesses your situation to offer you the best mortgage deals on the market.

Want to get loyalty rewards paid direct into your account as real money, try Tail app, which links to Monzo and Starling cards.

Meanwhile, there are apps for small business that can aggregate all their accounts in one place, or even aggregate all their open banking apps into one app – try 9 Spokes. And there are apps that mine your seasonal shortfalls to identify funding gaps, automatically trawl the market for the best loan offers, and send you a loan document to e-sign.

For sole-traders and small business owners that always get caught short on tax day, try the Coconut app, which estimates how much tax you need to save and advises on things that can be expensed.

And major retailers (see Sainsbury’s SmartShop app) have launched open banking apps that allow customers to scan and immediately pay for their shopping in-aisle, and then walk out the shop.

All this cool stuff is courtesy of – wait for it – a Competition & Markets Authority Review into banking that concluded the UK’s nine largest banks had to start sharing customer data with each other and authorised third parties. The regime went live as of October 2018, with little fanfare. While the term open banking itself is not well known, its application has set off an explosion of innovation and is one of the reasons for London’s exceptionally vibrant fin-tech sector.

Since then, a large number of countries have been looking to introduce their own version of open banking. The EU’s Payments Services Directive 2 will do something similar, however the regime does not specify an API standard, which means it will be harder for fin-techs to compete on a level playing field. Meanwhile Australia is planning to go live with open banking this year, as part its Consumer Rights Act, which will also eventually open up its power and communications sectors too.

The UK has been actively advising countries across the world, including Mexico which is notably advanced as a result of work with the British Consulate, in adopting open banking, in order to increase competition, innovation and also access to banking services in developing countries.

Open banking is a truly disruptive idea, enabled by technology, enforced by competition-focused regulators and delivered by the market. It’s a world-class British venture.


This email address is being protected from spambots. You need JavaScript enabled to view it.
or connect with us

World Class Britain Briefing

A five minute read every fortnight. Sign up to our newsletter, and share in our curiosity (and our surprising discoveries).

* indicates required