The real world applications of Open Banking are beginning to unfold and should be “commonplace” by the end of 2019, according to the regulatory initiative’s policy chief.
In a blog post reflecting on the progress made in developing and integrating Open Banking applications throughout the course of 2018, Alan Ainsworth, head of policy at the Open Banking Implementation Entity (OBIE), explained that he expects uptake of the financial data sharing protocol to grow rapidly once the third version of the Open Banking infrastructure is rolled out by the spring of 2019.
Writing in a review of Open Banking published by MHP, Ainsworth explained that the speed and efficiency of data exchange enabled by the technology could cut the time it takes for a debt advisor to prepare a restructure for a critically indebted customer from eight weeks currently to just 40 minutes.
Conceding that Open Banking, which has just celebrated the first year since its launch, was still in its infancy as a financial tool, Ainsworth said: “Imagine what people will be able to do when Open Banking is a reality – this reality is starting to unfold now, and should be commonplace by the end of 2019.”
A survey of the Open Banking landscape compiled by the OBIE found that a total of 100 financial services firms were using Open Banking protocols, including the CMA9 banks and building societies. The same survey found evidence of 17.5 million usages of Open Banking in November, up from one million in May 2018.
It comes after a separate analysis conducted by PwC last year found that Open Banking could become a £7.2 billion revenue opportunity for businesses by 2022 as consumers (64 per cent) and SMEs (71 per cent) adopt the technology to manage their financial data.
In his look ahead to the developments in financial technology, Ainsworth predicted that integration of multiple Open Banking apps would be key. “I’m going to sound nerdy, but app to-app redirection - which starts in March - will make using your FinTech app as easy as touch or face ID makes your mobile banking app.
Calling it “a real game-changer”, he added: “I also think we’ll see Open Banking becoming a blueprint for secure, controllable data transfer in other sectors.”
In his review, Mike Robb, managing director and head of financial services at MHP, said: “Open Banking has the potential to crack some of the toughest and most persistent nuts that have dogged the industry for many years.
But, he added that there remain undoubted challenges to Open Banking’s success. “Most obviously, the fanfare of 2018 did not live up to the hype, with a lack of awareness of the roll-out timeframe leading to an underwhelming first year.
“There remains, a more systemic problem once all functionality is live, with data security concerns from consumers themselves – whether real or perceived – posing a significant barrier to uptake.”
Subscribe to our newsletter to receive breaking news by email.