The majority of UK financial technology (fintech) companies see open banking as a major area of opportunity, according to UK FinTech Open Banking Snapshot, a study by EY published on 22 March. Four out of five fintech companies are already actively preparing to offer open banking solutions. Open banking regulations allow authorised third party providers to access bank account data through open APIs. It's ushered in by the revised Payments Services Directive (PSD2) and the UK's move towards open banking data in which the Competition and Markets Authority (CMA) required the UK's nine biggest banks to allow authorised third parties to access bank account data.
The study of 31 UK-based fintechs, which have collectively raised approximately £500 million in equity investment and employ 2,500 staff, showed that:
- 94 per cent of UK fintechs see open banking as a major area of opportunity;
- 59 per cent are now reconsidering who they collaborate with and three-quarters of those believe new competitors such as tech companies will become more important; and
- three in every 10 fintechs are already fully prepared and ready to share data for customers who consent.
Fintechs focus on open banking
The study found that fintechs are dedicating considerable resources to open banking projects. Almost a third are allocating teams of 10 staff or more to such projects (up to 25 per cent of the workforce in some cases). In terms of what could be done to help ensure open banking is a success, customer education was identified as the most important area, followed by agreed industry standards outside the nine banks identified by the CMA.
EY's Tom Bull commented: “As with all new technological developments, it will take time to bed down and for people to get comfortable with the concept of sharing their financial details. Over time, however, as education improves, it is hoped that increased transparency will be seen as a positive move, helping people make more informed financial decisions. It should also serve to further increase innovation and competitiveness across the sector, which can only be a good thing for consumers.”
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