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One of the factors underpinning the fintech revolution, in the UK at least, is a key regulatory change, called Open Banking. Here’s some bluffer’s notes to what’s going on. Your guide: Rishi Dastidar.
So what’s the deal? “Open banking” sounds quite good. Well, it certainly has the potential to be. Simply put, it’s a program to open up banking data in the UK. Neat. How long has it been going on for? It came into force in January 2018. I sense an EU directive behind all of this, am I right? You are. The catchily-named Payments Services Directive 2 (PSD2) is in part designed to try and create more competition in retail banking. The directive forces banks to share information about their customers with other licensed providers of financial services. OK, so what’s actually going on here? According to Open Banking,1 the body set up by the Competition and Markets Authority on behalf of the UK government to implement the directive, the change “is designed to bring more competition and innovation to financial services.” Britain’s biggest banks, including HSBC, Barclays and RBS will, when asked, have to release data in a secure and standardized form, so that it can be shared between other approved organizations. Crucially, customers have to give their explicit consent that information about their accounts can be shared. As Open Banking says, the change “puts [the customer] in control of your data: an easier way to move, manage, and make more of your money.”
1 — openbanking.org.uk
OPEN SESAME!
