Open Banking | Neill Robbins
Open banking adoption is increasing across financial services and quickly moving up the agenda of c-suite's business priorities. We caught up our very own Open Banking technologist to explore his thoughts around this exciting technology...
The amount of innovation and the pace of change is the most exciting thing to me about the Open Banking ecosystem. Allowing users, the ability to provide access to their transactions has resulted in an explosion of value-added services. Examples range from user facing services that can use machine learning to understand a user’s financial position across a number accounts to regularly sweeping small amounts into savings and investment products. Sweeping to back-office services can leverage an understanding of customer’s financial health to make better, quicker and cheaper decisions with respect to fraud and affordability – all without asking a user to provide paper documents. There is a quiet revolution going on out there!
Mostly I think adoption will be indirect. In my opinion there is still a way to go before the average consumer is comfortable using alternatives to payment cards to pay for goods and services; there aren’t that many businesses that accept “Pay by Open Banking” right now, although that is growing, similarly to how “Pay by PayPal” has in recent years. However, there are a lot of FinTechs providing value-added services that use Open Banking as a facilitator. Some of these use cases weren’t possible even a few years ago, but the early adopters, particularly the younger generation are quickly seeing the benefits to be had, even if the process is a little cumbersome at present.
There have been quite a few challenges for sure. Probably the biggest one is security – the Open Banking ecosystem has been designed to be very secure – while also allowing interested parties to get access to extremely sensitive customer data with appropriate consent. The technical understanding required to correctly implement and manage the security model is daunting – particularly for smaller organisations that maybe do not have the resources to dedicate to it. Another challenge is integration – delivering data from the bank’s Host systems to the Open Banking APIs in a manner that plays well with the systems and services that consume or update that data can require wholesale changes to the banks architecture.
I expect to see more APIs that build on the Open Banking security architecture, continuing to provide innovations such as Confirmation of Payee, Variable Reoccurring Payments and Confirmation of Funds, and an increasing number of non-regulatory APIs that banks provide via the same platform for a fee. Getting creative on top of the Open Banking platform allows banks to generate additional income streams and differentiate themselves in an increasingly competitive market.
Banks will increasingly need to compete on functionality and service – particularly in the savings and investment spaces. I expect to see banks creating communities and niches where they can leverage their brands to provide more services than they traditionally have.
Richard Feynmann – He was a Nobel prize winning physicist that was one of the fathers of Quantum Electrodynamics and a mean bongo player. His video lectures which you can find on You Tube are fascinating because he had an amazing ability to be able to communicate difficult subjects in a manner that made them understandable.
When Neill isn’t keeping active by snowboarding, rowing or running, you’ll find him with his head in a technology book or planning his next music gig. Neill is one of the original UK ‘Sandstoners’ joining the business when our UK arm was born back in 2004.