Open Banking or PSD2 is rolling out today.
The article below in Wired provides an excellent explanation on the legislation.
The FCA found in their latest survey that 24% of adults have little or no confidence in managing their money and 46% of all UK adults report low knowledge on financial matters...
In brief PSD2 Open Banking forces the UK 9 largest banks to pass your transactional information (lending, borrowing or spending in Nandos etc) to third parties, who can use it to create new products.
Whilst it will take time to kick in and only specific companies can access this data, I have no doubt that we will see a new wave of tech firms (like Uber leveraging Google maps) and existing enter the banking industry.
With the aforementioned statistics I personally see this laying the path to a country with better financial transparency and understanding. Finally tech firms will be able to provide aggregators or a digital wallet containing your financial affairs. In my opinion there is not enough transparency from big banks and this does not help both an ageing and young population when managing their financial affairs.
I could see the more agile and tech savvy challenger banks like Monzo (who have signed up already), Starling and Revolut providing aggregator services as a new application and thus draw in a new client base, perhaps students or those beginning work.
Equally this might be an acquisition opportunity from the large banks who need to adapt quickly.
From a marketing perspective it would make sense to lead with management of finance to drive inbound interest. Which? found that 92% of those who bank do not know what PSD2 is, this would be a good starting point!
The content produced and distributed early on in this industry really could be the difference in long term success. Watch out for tech firms who you don’t associate with banking begin to educate you to create the trust and a relationship for future banking plans.
To see changes in action it might be worth watching the following money management platforms that have linked to Open Banking: Bud, bean, Chip, Yolt, Plum, Coconut, Trussle and Fluidly.
Open Banking forces the UK’s nine biggest banks – HSBC, Barclays, RBS, Santander, Bank of Ireland, Allied Irish Bank, Danske, Lloyds and Nationwide – to release their data in a secure, standardised form, so that it can be shared more easily between authorised organisations online.