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EY: Open banking heralds a new era in financial services

Jan 19
 
Tags: Ernst & Young LLP
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EY: Open banking heralds a new era in financial...

The UK this month launched its open banking initiative, the aim of which is to stimulate competition in financial services by making it easier for consumers and smaller businesses to share their bank account information securely with third-party providers.

It followed an investigation by the Competition and Markets Authority in 2016 which concluded that larger, established banks are not having to work hard enough to keep their customers.

Open banking officially came into effect on January 13th 2018. The launch will be followed by a six-week period of the UK's largest account providers and regulated third parties coming online and trialling the system using selected test accounts.

Potential consumer uses of open banking include people being able to see an aggregated view of their various accounts through a single provider, or allowing a third party to analyse their account data in order to offer budgeting advice.

Imran Gulamhuseinwala, trustee of the organisation overseeing the initiative, said it is a "major step towards giving the customer real ownership and control of their finances and data".

EY's position on open banking is that it marks the start of "a new age" in financial services, where consumers can use their information with confidence to access better deals.

Dan Cooper, UK banking and capital markets leader at the firm, said there has been "understandable concern" about the sharing of private data. However, he also said it is crucial to remember that the consumer is in full control of "what, when, to whom and for what purpose they share their data".

"Of course, as with all new technological advancements, it will take time to bed down and for people to get comfortable with the concept of sharing details of their financial affairs," Mr Cooper added. "In the medium to long term, however, the hope is that increased transparency will be seen as a positive move."

The UK is the first country in the world to launch a project of this kind, with many other nations looking to follow its lead, according to Mr Gulamhuseinwala.

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Image: iStock/daizuoxin

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