Open Banking…drifting, accelerating, or speeding towards Open Finance?

It’s been just a couple of years since under new EU legislation (thanks EU!) banks were required to allow third-party access to account information and payment services. This change effectively breaks their monopoly and opens the industry to innovation and competition.

The first push was to get the bank infrastructure and links set-up. That has been a tough job- with varying levels of bank support and enthusiasm- however with the links in place we are now starting to see a small number of new consumer services being launched. It still feels very much like the beginning.

What’s next – the dreaded D word?

As new open banking services hit the market, futurists leap forward to…‘so what’s the next big play’? The banking industry sits bolt upright when the term deregulation floats casually around panel discussions …deregulation being where banking manufacturing and banking distribution are separated- rather than less regulatory oversight. If the goal of legislators is to promote innovation and competition, is deregulation the end game – a ‘copy and paste’ of the playbook from the Energy and Telecoms sectors?

That got me thinking…

Will legislators take the leap to separate banking manufacturing and distribution?

Perhaps the banking industry will do it themselves. If enough choose to act as service providers to innovative third parties then is there a need for legislation?

The answer might already be here – perhaps we are on the way to an innovative and competitive market. Challenger Banks, Fintechs and incumbents are popping up/evolving much more quickly than new energy grids or telecoms networks did.

Whatever the answer, the message from our law makers is likely to be, ‘do it yourself or we will do it for you’.