Imran Gulamhuseinwala: On his vision for Open Finance, encouraging ‘premium’ APIs, and whether Open Banking is actually working

After years of promises, regulatory back and forth, and campaigning by both supporters and critics, Open Banking is today used by millions of people and businesses to manage their finances—most of whom have never even heard of ‘Open Banking’.

For Imran Gulamhuseinwala, the Open Banking Implementation Entity’s (OBIE) announcement last week that it has crossed 2m users is a ringing endorsement of his work over the past four years.

“It really shows that if you give people the tools to safely and securely look after their data, or take control of their data, then that's what they're going to do,” he tells AltFi.

An engineering alumnus of Cambridge University, Gulamhuseinwala rose through the ranks of consultancies Oliver Wyman and later EY where he became global fintech lead for the practice, while also co-founding fintech CommuterClub before being appointed ‘implementation trustee’ of the OBIE by the UK’s Competition and Markets Authority in 2017.

Today the OBIE’s power extends into the UK’s nine largest banks (the CMA9), where the entity has the ability to implement the API standards now responsible for a flourishing multi-billion-pound sub-sector of fintech and finance.

Gulamhuseinwala says the latest 2m milestone from the OBIE indicates adoption is currently doubling every six months, and he remains “blown away” at the huge ecosystem of 300+ authorised entities, from fintechs to challenger banks to alternative lenders, who are building on Open Banking APIs.

But for the softly-spoken trustee, his work is far from done. Gulamhuseinwala says the Open Banking standards are around 90 per cent implemented, with payments and refunds next on his hit list to enact.

“The benefits to the customer are that they won't have to share their sensitive card data with any third party,” he explains, with a nod to the Open Banking payments currently being implemented by the likes of NatWest and Monzo.

“And it's great from the merchants’ perspective because they get the money in pretty much real-time and don't pay card interchange fees on it.”

Refunds are further down the line but will enable the same pathways for money to be quickly refunded without merchants needing to go through a card processing middleman.

It’s an exciting prospect, but Gulamhuseinwala admits the bulk of Open Banking today is “almost all data” and is largely focused around personal financial management (PFM) apps and services.

PFM covers account aggregation, which lets consumers and businesses see all of their accounts in one place, led by sector champions like Yolt and even high street banks like NatWest, Lloyds and Halifax.

Critics of Open Banking

For critics of Open Banking, the domination of PFM among Open Banking API calls today is a sign that the regulatory push is failing on its promise of spurring real competition in financial services, and has become merely a box-ticking exercise for many banks.

“We had a dual objective,” Gulamhuseinwala responds. “Which was not just to increase competition, but innovation as well.”

He argues that on both points the OBIE is succeeding. 

On the competition front yes, PFM is the most popular use-case at the moment, but these services are still nascent and are just starting down the path of prompting consumers to switch financial deals, change bank accounts or consider a new mortgage—surely a boost for competition.

On the innovation front, whether it’s business lenders using Open Banking to quickly check statement data in a tamper-proof and secure way, or retailers just starting to explore Open Banking push payments which avoid the expensive and fraud-prone world of card processing entirely, innovation is clearly happening.

Open Finance

Moreso when I ask Gulamhuseinwala account what’s coming next for Open Banking, and touch on the subject of Open Finance, that’s where the trustee’s eyes truly light up.

Open Finance speaks to the broadening of financial data sharing to include new types of financial product, like connecting your mortgage, pension or even home insurance to a PFM app or giving a financial adviser a more holistic picture of your finances with just a few clicks.

Gulamhuseinwala is clearly an advocate of this movement, for which he calls Open Banking a “foundational steppingstone” towards.

“The question I've got is how quickly this happens and how strong will the mandate be? Personally, I believe that the mandate needs to be strong.”

Strong because Open Finance will involve not just wrangling nine banks to deploy a single agreed set of APIs like the OBIE did, but dozens or perhaps hundreds of financial institutions all working with vastly different datasets.

“I think we need it [Open Finance], not just because it's a very common-sense thing to do, to use the existing knowledge and infrastructure that's developed in Open Banking, but because you've got to make this simple for users. Simple means a single way of engaging with all of their financial data. Not a different platform for mortgages, another one for savings, a different one for pensions.”

The Financial Conduct Authority (FCA) is currently studying the input from a wide-ranging Call for Input on how Open Finance should be developed and implemented, a process which undoubtedly has been slowed down by the events of 2020.

But whatever the outcome of the FCA consultation, the expansion of Open Banking appears to be happening, with or without the OBIE’s input, in the world of ‘Premium APIs’.

Premium APIs and the future

While most high street banks are still grappling with the originally mandated frameworks outlined for the OBIE, some are already pushing the boundaries.

Starling Bank, for instance, has broadened the datasets its users can share via the Marketplace to include fields never outlined in the Open Banking spec.

“The regulatory APIs, the ones I've powers to mandate the banks to populate, are limited in the amount of information that they have to share,” admits Gulamhuseinwala.

“Where Starling is going and where I feel the industry needs to go—and also that I'm encouraging—are these Premium APIs.”

Premium APIs are proprietary data connections facilitated through bilateral commercial agreements.

“That's where we're going to see a lot more action and activity in the coming months.”

And while this all seems to be anathema to the vision of open data sharing that the OBIE was established to promote and could lead to a fragmentation of the standard, Gulamhuseinwala is convinced Premium APIs will ultimately further Open Banking’s cause.

“The benefit to us is that we're going to get better performance in the regulatory APIs, because now the banks have another incentive to make that whole infrastructure work better.”

Furthermore, the power of Open Banking is multiplied by wide adoption, its network effect, therefore Gulamhuseinwala expects any Premium API traction will simply result in banks calling for the OBIE to update its spec, thus furthering its original goal.

The fact that the OBIE only ever had the powers to require nine banks to implement an API standard, yet 90 other banks have voluntarily adopted it, plus hundreds of fintechs and other financial institutions have built propositions supporting it is testament to the power of this network effect.

It’s clear that with millions of users and hundreds of applications, Open Banking’s growth trajectory is set.

What’s less clear is quite where the standards-setting work of the OBIE goes next—whether moving on to tackle the surely larger challenge of Open Finance to come with a stronger mandate, as Gulamhuseinwala calls for, or stepping back and letting the Open Banking industry flourish.