New Open Banking rules are set to boost the UK’s fintech sector.From January 13, 2018 new rules come into force meaning that all of Britain’s banks will be required to make customer account data available to approved rivals.
If Open Banking proves a success, it could mean a wider range of financial services for small businesses and new opportunities for ambitious fintech startups. This is because the high street banks, who control the majority of current accounts, hold a huge amount of data on how their customers manage their money and if bank customers authorise third parties to access their information, data-driven loan providers will be able to create bespoke loans and services with a fast decision.
According to analysts if all goes according to plan, the new regime will herald a bold era of competition by allowing up-and-coming challenger banks and financial technology businesses to compete on a more-or-less level playing field with the giants of the financial services industry.
And as Christoph Riech, co-founder of small business lender iwoca, pointed out, the technology will also mean much less duplicated paperwork. “Open Banking will help remove many of the barriers to finance that UK small businesses face. “Finance providers, will be able to use Open Banking data, which only the banks can currently access, to eliminate endless form filling and make fairer credit decisions – helping small businesses and unlocking faster economic growth.”
Some lenders including HSBC and Barclays are set to miss the deadline for adopting the new rules. Others, which include RBS, Santander and Bank of Ireland – have been granted extra time to comply with the rules by Britain’s competition watchdog, ranging from a few weeks to up to a year.
Allied Irish Bank, Danske, Lloyds Banking Group and Nationwide will be ready to start on time this month.