Open Banking's impact on the payments industry

Regulation and Compliance

Simon Chan

Sep 5, 2018

Simon Chan, Associate Director and Global Lead of Emerge at Edelman

It’s been more than 8 months since the go-live date of the UK’s Open Banking initiative. But has Open Banking’s impact on the payments industry been anything like anyone expected it to be? Has anything actually changed since the introduction of what was meant to be a shake-up for UK bank accounts?

The answer is yes and no.

While banks are now required to offer APIs that allow customers to send payments via regulated third-party providers, it has become clear that for the time being, the focus – and benefit – of open banking is largely consumer-based.

For example, large banks have started to see Open Banking as an opportunity to speed up innovation, but mostly through consumer applications, as with HSBC’s launch of their Connected Money app which allows customers to use accounts at up to 21 banks in one place. Metro Bank has also just announced that it’s opened a developer programme.

The adoption of Open Banking for business payments has been somewhat slower, however, as the industry wraps its brain around what the uses and implications will be. We’ve just started to see some corporate-led initiatives, such as with Australia-based Trade Ledger recently announcing the launch of its open banking platform for corporates in Europe.

According to research from PwC, the Open Banking sector could quadruple in worth in four years’ time, with 71% of SMEs expected to adopt it by 2022.

The opportunity is here and what we’ve learned in these past months is that what was supposed to be a disruptor for UK bank accounts, promising flexibility and efficiency to consumers, still has a long way to reach its full potential. Education will be key for a successful adoption, and it’s likely to take some months before the industry is able to realize the full potential of open banking the area of business payments. The good news however, is that while the Open Banking’s impact on the U.K. and beyond is a mystery the world has yet to understand, the benefits are all there in the form of improved cash visibility and transaction reporting as well as significantly increased efficiency.

Related topics

Global Payments Open Banking

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Simon Chan

Throughout his public relations career, Simon has developed extensive experience in the payments technology industry. He has worked with large organizations such as KPMG and Microsoft as well as global scale-ups like Everledger, Sigfox and Tink Labs. He's currently focused on finding a duty of care for Blockchain technology.
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