I am working on a white paper which had its origins making the case for a comprehensive Open Banking offer but I am running Into a challenge and basically got stuck.

My mission for the white paper originally arose from quotes and comments captured in earlier posts on bankwatch.ca:

• Creating a Blueprint for open banking – ozone API
• Open Banking now has over 6 million active users in the UK
• The OBIE will continue to ensure that the 6 banking providers maintain the required standards and will promote Open Banking to encourage industry adoption.
  

The consumer impact is noticeably absent. The Road Map is technical in nature. The API design and approach are well documented and targeted but the consumer is absent.

BACKGROUND ANALYSIS

The successes to date reflect building to Open Banking standards but primarily for digital processes already used by consumers; primarily payments. On the other hand uptake of new and potentially available Open Banking processes including but not limited to, movement of banking arrangements between banks, aggregating information from multiple institutions, and other nouveau activities are missing.

This comment has a degree of finality that is not, in my view reflective of reality.

Following a report from the Implementation Trustee, the CMA has determined that the 6 largest banking providers in the UK (Barclays, HSBC, Lloyds, Nationwide, NatWest and Santander) have now implemented all the requirements of the Open Banking Roadmap, and the Roadmap is therefore substantially complete.

The public statement takes “Roadmap is therefore substantially complete” literally and I admit that certainly irked me. It is used it to back up the oft quoted six (6) million open banking participants. This sounds like an over-simplification; indeed there are 6 million users because of a successful implementation to upgrade the banking platform, primarily the components that support payments and with banks providing API access.

But the the important aspect is that consumers are using a platform which has been upgraded. They were already using the platform and no selection was made to participate.

The Government approved Road Map (2020) says this:

”Today the CMA published the Final Agreed Roadmap on Open Banking, laying out the steps required to take to finalise the implementation of Open Banking. Already an ecosystem of more than 200 third parties are delivering tangible products and services powered by Open Banking to more than one million users, and more of us are realising the benefits of Open Banking every day.

Road Map components is comprised of a list of banking processes subject to compliance. It is technical in nature.

CONCLUSION

The platform upgrade met the requirements of the government Road Map because the Road Map was designed to ”not” fail.

The question I asked myself and could not answer is how can Consumer behaviour be engaged and aligned with the Road Map blueprint.

It is worth recalling here that the Open Banking mission originally was to solve consumer friction which hindered inter bank competition. This was a by product of the evaluation framework falling the Banking crisis in 2008 and the Government were rightly concerned that consumers were afraid of losing their savings due to bank failure but had no easy solution.

There are precedents and in Canada one of the most successful was email money transfer. Despite the naysayers when this was deployed it was very successful because it resonated with consumers and no sign up was required. It is now considered table stakes and banks have incorporated into their legal, fraud and risk processes. The critical driver of success was the resonance with consumers.

I would argue there is no such resonance for Open Banking with consumers. This is where I became stuck for a solution in my White Paper.

I needed a new hypothesis to test. While I have been considering the 2023 banking crisis and the drivers of regulatory change required to address it, there could be something there. I have studied bank regulatory change for some time and I must say the changes are not well targeted nor even successful when considering the last crisis even spread systemically as it did despite Basle x regulation.

Hypothesis is there an opportunity to:

• include the open banking customer offer, with
• open and predictable bank regulation
  

Under this hypothesis both banks and consumers would be jointly incentivised so that Banks would better accept the regulation seeing the opportunity to increase NonInterest Income and NIE. Conversely Consumers would feel safer, willing to aggregate their accounts in multiple institutions for legitimate benefit.

I may be dreaming in technicolor but I see germs of a conclusion for the white paper.

Contributions, criticisms and suggestions welcome.

Tags #openbanking #RoadMap #CMA #aggregation #bankcompetition