A
dvances in open banking in the
UK and Europe have made head-
lines in recent years. Regulators
elsewhere have been doing their best to
keep up, including those in Brazil, India,
Hong Kong and Singapore. Where regu-
lators sit back, as in the US, consumer
demand has sometimes led the way.
Until this year, that is. The Covid-19
pandemic and associated lockdowns have
placed a drag on the growth of open
banking. Things had been looking good:
Precrisis customer numbers doubled in
six months in the UK to pass the one
million mark in January, according to the
Open Banking Implementation Entity
(OBIE), which is governed by the UK’s
Competition and Markets Authority and
funded by the country’s nine largest banks
and building societies.
But more-recent fi gures are not yet avail-
able, and many expect a pandemic-related
impact. Imran Gulamhuseinwala, imple-
mentation trustee at the OBIE, acknowl-
edges tht “the rate of growth has slowed.”
Some experts downplay current concerns
about single immediate payment systems,
refund functionality and the performance
of the all-important application program-
ming interfaces (APIs), which allow cus-
tomer data to be shared across platforms.
After all glitches are to be expected in any
tech development project.“There was a bit of naïveté about how
easy it would be,” says Gulamhuseinwala,
noting that the “genuinely pioneer-
ing” OBIE initiative had to be built from
scratch. “There was no model anywhere
that we could copy,” he says. “You can start
with a blueprint, but you have to adjust as
you come across challenges.”
Open banking and its corollary, open
fi nance, appear to be straightforward con-
cepts on paper. Open banking means tak-
ing the monopoly on account information
from big fi nancial institutions and giving
consumers access via networking of data. A
central aim is to facilitate payments; but in
principle, it could also encourage competi-
tion and help individuals and fi rms make
more-informed decisions. The next logi-
cal step, open finance,
would allow customers
to shop online for fi nan-
cial services, including
credit, mortgages, insur-
ance and pension fund
management.
Evidence of a slow-
down in open banking
implementation had already appeared prior
to the coronavirus crisis, however. Last year,
the European Banking Authority extended
its September 2019 deadline for full com-
pliance with its Revised Payment Services
Directive to December 31, 2020.In the UK, where regulators pushed
leading financial institutions to build
the necessary infrastructure and encour-
aged the development of fi ntechs, busi-
ness payments company Bottomline
Technologies’ annual Business Payments
Barometer, a survey of fi nancial deci-
sion-makers, found that fewer respon-
dents felt they were ready for open
banking in early 2020 than a year earlier:
down 8% to 59%.
“People are probably experiencing
a bit of a tsunami of initiatives that are
happening right now,” says Ed Adshead-
Grant, general manager and director of
payments at Bottomline. It’s just too
much at the same time.
The big question “is the speed of cus-tomer adherence to open banking systems,”
says Roberto Teixeira da Costa, former chair
of the Brazilian Securities Commission.
“In countries where open banking has
already been implemented, membership
has generally been lower than expected.”A Far
Reach
Despite the best efforts
of innovators and
regulators, ubiquitous
open banking might
still be a ways off. Can
the Covid crisis help to
jump-start it?
By Bill Hinchberger“There was a bit of naïveté
about how easy it would be.”
—Imran Gulamhuseinwala,
Open Banking Implementation Entity36CORPORATE TREASURY SUPPLEMENT 2020|OPEN BANKING
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