By Oliver Smith on Tuesday 24 November 2020
Lessons to be learned from Open Banking’s successes and failures.
Startup policy group Coadec (The Coalition for a Digital Economy) is calling on the government to accelerate the FCA’s Open Finance initiative, and look to what’s happening Down Under as inspiration.
The Australian Consumer Data Right (CDR) is aiming to give Australians the right to access not just financial data, but also their utility and telecoms data by 2021.
Coadec points to the savings, credit, mortgages and pensions markets which should be prioritised in order to get the Open Finance initiative started.
“What Open Banking has shown that when the consumer is in control of their data and who they share it with, this can build trust, drive engagement and empower activity,” said Joel Gladwin, head of policy at Coadec.
The paper, entitled ‘Breaking Banks’, said the crux of Open Finance should be a new data sharing right for consumers, which fundamentally gives them the power to control their own data.
“By granting consumers a new data sharing right, and encouraging a market of API specialists to compete in building the plumbing for Open Finance, banks will have very little room for maneuver this time. Ultimately, this will allow consumers to access better, and more tailored, financial services than they do currently,” said Gladwin.
Coadec also warns of the right os so-called ‘premium APIs’ which are seeing banks and providers offering bespoke integrations beyond what the Open Banking frameworks allow, albeit at a cost.
The report alleges that this is an example of banks looking to “entrench their dominance once again”.
Finally the report calls for Open Banking’s 90-day re-authentication rule, which as the name suggests prompts consumers to reconfirm their use of Open Banking every quarter, to be scrapped.
“This has forced startups to endure customer attrition rates between 13% and 65% according to industry data, which are not viable for any business at either end of the spectrum,” Coadec writes.
While the report included data and input from Plaid, TransferWise, Monzo and PensionBee, its recommendations weren’t signed by those companies or any other industry participants, and the report wasn’t addressed or aimed at the FCA or government.