WHAT IS OPEN BANKING?

In essence, Open Banking is a set of rules which allows the user access information from varying financial institutions (banks, payment service providers, insurance companies and etc.) through application programming interfaces (APIs).

To put it in human terms, no matter how many accounts you have in different banks, you’ll be able to access them all in one place. Even more convenient is the fact that switching from one provider to another, opening/closing of accounts, payment initiation will be as easy as winking. Customers will be able to make informed choices from publicly available market data.

On the business side, adaptable start-ups will get access to client data and start offering banking services. The trick is, these lean start-ups will not have to put up with heavy legal regulation or capital requirements typically compulsory for the banks. And that’s a real game-changer moving from a closed system in the direction of “bank as a platform” model.

Instead of relying heavily upon the centralized data storage of separate banks, Open Banking is shifting the load on API networks and will kick off a wide array of business opportunities. Clients will be able to get insights on their spending habits and get personalized suggestions how to improve. And that’s only breadcrumbs of what’s to come.

“The money revolution nobody knows about” — Independent.co.uk

ARE WE READY?

No surprise that the banks are not overly keen to jump on the bandwagon. According to PwC report published in H2 2017, 70% of 39 interviewed bank representatives reported that PSD2 is going to affect all bank functions.

On the other hand, only 9% of banks were in API protocol implementation phase at the time of interviews. Interviews were conducted during the period of April — July 2017.

Open Banking train is leaving in Europe and sooner or later, everyone will have to play ball.