Abstract: Arthur has developed here a modern contextual view of Open Banking and Open Finance. He begins with the right question “Open Banking – a reality or not”. However there are gaps worth exploring for inclusion in this summary. These gaps lie with Safety of Funds and Consumer preferences and motivation to adopt.

Arthur Bedel
Co-Founder @ Connecting the dots in Payments… | Global Revenue at VGS | Board Member | FinTech Advisor | Ex-Pro Tennis Player
Linkedin

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There remain unanswered questions in this evolving definition which are critical to the success of Open Banking. These gaps are in i. Platform Security and ii.Business purpose and customer need which his addressed

Analysis – Platform Security
The success of Open Banking lies firmly at the feet of customer knowledge that their funds are safe, and that payments are assured to be travelling to the intended recipient. The origins of Open Banking arose in 2008 in UK when it was determined that a cause of the banking crisis of that era arose customers being locked into their FI and the friction from shifting FI was too great. Hence the colloquial Ditch and Switch reference in the original mandate along with concern over fees and overdrafts.
The government took an ultra extreme view and effectively took over the banks through direct government ownership following the 2008 Banking Crisis. This was to buy time to create a free environment while the government created a framework and environment to address the friction and offer customers the facility freedom to move funds from one FI to another with fewer hurdles.
Movement in Canada was to follow the British model and improve where required with explicit words to address customer security of funds and customer needs including unbanked.
( 2021 Canadian Government Approval). Note: nothing ever happened in Canada as the Goverment became stuck in a polotical and organisational morass.

Sjmmary of the Canadian Goverment view:

What is Open Banking?
Open banking allows consumers and small businesses to securely and efficiently transfer their financial data among financial institutions and accredited third party service providers. This transfer gives consumers access to a more complete financial picture and other useful services to improve their financial outcomes. Open banking can connect families with a broader range of budgeting or savings tools and provide financially marginalized Canadians access to low cost, automated support to manage their finances. Open banking can enable Canadians with limited credit history, including newcomers, access to credit based on their financial transaction history.

How will Consumers Continue to be Protected?
Consumer trust is fundamental to the success of an open banking system. In order to ensure take-up, consumers must have confidence that the system is secure and that they are protected in the event that something goes wrong. Further, a system of open banking is predicated on the notion that an individual has the right to control, edit, manage, and delete information about themselves and decide when, how, and to what extent this information is communicated to others.
The next steps of Open Banking with Britain and their approvals required can be viewed here. Note the next steps are solidly in favour of addressing the need it security of funds.
“Open banking is a secure way for consumers and businesses to give regulated third-
party providers (TPPs) access to their payment account data and to initiate payments.
Open banking has come a long way since the conclusion of the Competition and
Markets Authority’s (CMA) retail banking market investigation in 2016, the introduction
of the Retail Banking Market Order 2017 (CMA Order), and the implementation of the
Payment Services Regulations 2017 (PSRs 2017). The UK pioneered open banking and
established itself as a leader in the field. We are now taking the next step on the UK’s
open banking journey”

The original mandate is summarized in Smiths comments below with are pointedly transactional and customer need focussed.
Note also the inclusion of Payments with firmly addressed the publication if a successfuk endeavour notwithstanding non inclusion in the original mandate.

        Alasdair Smith, Chairman of the retail banking investigation, said:
    Open Banking will make a transformational change to banking for personal customers and small businesses.For the first time innovative and secure apps will provide personalised services and information to cover all financial needs in one place, and make it easy for people to find out what bank account is best for them.
    We’re also making banks send alerts to people about to slip into overdraft to help them try and avoid unnecessary charges. Banks receive £1.2 billion a year from unarranged overdraft charges. A new alert system, combined with our order to require them to  publically announce their maximum monthly charges, should mean significant savings in future for their hard-pressed customers.
    Today’s announcement represents an important milestone in a co-ordinated set of actions taking forward the CMA’s banking reforms.
    The CMA has already accepted undertakings from Bacs to make ‘ditching and switching’easier. It has committed to improve the Current Account Switch Service within a year by extending the time the automatic redirect service is available when they switch banks  actively provide information to those people who would benefit most from changing bank and introduce independence into governance of the switching system.

Conclusion
This was a quick and somewhat messy summary of the history of Open Banking and does not even address Open Finance. The elements of fund security and customer needs nevertheless less are fundamental and we must stop viewing Open Banking as a technology play.

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Linkedin post and the motivation for this blog post follow here:

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Arthur Bedel
Co-Founder @ Connecting the dots in Payments… | Global Revenue at VGS | Board Member | FinTech Advisor | Ex-Pro Tennis Player
Linkedin
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𝐎𝐩𝐞𝐧 𝐁𝐚𝐧𝐤𝐢𝐧𝐠 – a reality or not?

The rapid evolution of 𝐎𝐩𝐞𝐧 𝐁𝐚𝐧𝐤𝐢𝐧𝐠 is reshaping the financial services landscape globally. Leveraging the source, a bank account or a wallet, directly to enable a payment is gaining momentum (finally…).
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𝐖𝐡𝐚𝐭 𝐢𝐬 𝐎𝐩𝐞𝐧 𝐁𝐚𝐧𝐤𝐢𝐧𝐠?

Open Banking allows 3-party developers to build applications and services around financial institutions. It enables secure access to customer banking data (with permission) to improve services such as payment initiation, financial management tools, and data aggregation. It relies on several key foundations:

► 𝐀𝐏𝐈𝐬 — Facilitate seamless communication between banks and third-party services.

► 𝐃𝐚𝐭𝐚 𝐏𝐫𝐢𝐯𝐚𝐜𝐲 & 𝐂𝐨𝐧𝐬𝐞𝐧𝐭 𝐌𝐚𝐧𝐚𝐠𝐞𝐦𝐞𝐧𝐭 — Ensures secure data sharing while safeguarding customer consent and privacy.

► 𝐂𝐨𝐧𝐬𝐮𝐦𝐞𝐫 𝐏𝐫𝐨𝐭𝐞𝐜𝐭𝐢𝐨𝐧 — Involves measures such as fraud detection and dispute resolution, ensuring customers are protected at all times.

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𝐖𝐡𝐚𝐭 𝐢𝐬 𝐎𝐩𝐞𝐧 𝐅𝐢𝐧𝐚𝐧𝐜𝐞?

𝐎𝐩𝐞𝐧 𝐅𝐢𝐧𝐚𝐧𝐜𝐞 𝐞𝐱𝐩𝐚𝐧𝐝𝐬 𝐨𝐧 𝐎𝐩𝐞𝐧 𝐁𝐚𝐧𝐤𝐢𝐧𝐠 by incorporating a wider range of financial services, including investments, pensions, insurance, and mortgages. It aims to create a comprehensive financial ecosystem by connecting various financial products to deliver a holistic view and personalized experiences for consumers.

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𝐓𝐡𝐞 𝐅𝐮𝐭𝐮𝐫𝐞 𝐨𝐟 𝐎𝐩𝐞𝐧 𝐁𝐚𝐧𝐤𝐢𝐧𝐠 & 𝐎𝐩𝐞𝐧 𝐅𝐢𝐧𝐚𝐧𝐜𝐞

► 𝐒𝐦𝐚𝐫𝐭 𝐃𝐞𝐯𝐢𝐜𝐞𝐬 & 𝐈𝐨𝐓 𝐈𝐧𝐭𝐞𝐠𝐫𝐚𝐭𝐢𝐨𝐧 (2025 onwards) — Imagine accessing your financial services directly through wearable technology or smart home devices.

► 𝐁𝐞𝐲𝐨𝐧𝐝 𝐁𝐚𝐧𝐤𝐢𝐧𝐠 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 — Open Finance will push the boundaries of banking, offering more services such as automated utilities switching, lending, insurance, and more.

► 𝐈𝐧𝐭𝐞𝐥𝐥𝐢𝐠𝐞𝐧𝐭 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 — Personalization engines, chatbots, and augmented advisors will enhance customer engagement.

► 𝐆𝐥𝐨𝐛𝐚𝐥 𝐃𝐢𝐠𝐢𝐭𝐚𝐥 𝐄𝐜𝐨𝐬𝐲𝐬𝐭𝐞𝐦𝐬 — Open Banking will continue to expand through fintech partnerships, embedded finance, and digital brands.

► 𝐓𝐡𝐞 𝐑𝐢𝐬𝐞 𝐨𝐟 𝐃𝐢𝐠𝐢𝐭𝐚𝐥 𝐖𝐚𝐥𝐥𝐞𝐭𝐬 — With the increasing adoption of digital wallets, Open Banking will seamlessly integrate wallets as a core element of financial transactions. Digital Wallets will be the portal to access bank transfers as a form of payment globally.

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𝐓𝐡𝐞 𝐁𝐨𝐭𝐭𝐨𝐦 𝐋𝐢𝐧𝐞
Open Banking and Open Finance are not just the future — they are the now. With increasing digitalization, financial institutions, fintech companies, and wallets are adapting rapidly, creating a seamless and personalized financial experience for customers globally