Sean Devaney, Vice President, Banking & Financial Markets, CGI
Open Banking was heralded as a game changer for banking in the UK and Europe, promising an abundance of new services in an open and competitive marketplace that would allow challenger organisations to supply better services to their customers. Launched in January 2021, the big banks in the UK have all implemented the service in partnership with a number of non-bank organisations, and the regulator is keen to build up the offering. So why haven't we seen the promised explosion of recent and innovative services yet?
There are two key reasons behind this. First, it is a matter of trust. Do people want to allow small technology start-ups to possess access to their bank statements and then make payments on their behalf? Secondly, it is simply not easy to use.
The first problem is one that isn't going to get solved quickly; consumers are, not unreasonably, reluctant to allow others to have access to their accounts. After all, we've spent the final 20+ years telling people to avidly guard their online banking details to stop fraudsters and other malicious actors from accessing their accounts. Changing this perception will require two things: time, along with a killer app.
When contactless cards were first launched, there was significant resistance to their use from consumers and businesses. Consumers were concerned that the lack of PIN was a security risk, that people would be able to empty their bank accounts whilst brushing past them in a crowd. Businesses needed to purchase new terminals at the till that accepted these new contactless cards. Mass adoption only came following the transport networks started using contactless payments rather than paper tickets.
This was a service that enabled a significantly smoother and easier ticketing process, also it was promoted by trusted brands like Transport for London. Once mass usage began, retailers first viewed it as an opportunity to save time at the till and so were ready to invest in contactless. Now people use contactless cards on a daily basis, comfortable that their money is safe. Building that trust into the Open Banking environment will take time, and it will probably take an organisation that is trusted to provide other services to users on a daily basis.
The second problem – ease of use – is a that the industry and the regulator must solve to ensure that Open Banking to flourish. Today's innovative financial services applications all rely on one key factor: they are super easy to use. Today, in order to access your bank statement, get your balance or make a payment for you, the Open Banking enabled service provider has to connect to your bank after which use your bank's processes to make sure that you are who you say you're, that you have the authority to allow use of that particular bank account and that you consent to give access to a particular group of information for a particular purpose as well as for a set amount of time.
The real problem is not that the bank is suggesting that you confirm that you are allowing access to your account – that seems entirely sensible. It is the clunky, inefficient and inconsistent method in which it's been implemented that causes the problem. Currently, the user experience can be as simple as a couple of screens, or as complicated as 10 or even more screens requiring user IDs, emails, PIN numbers, passwords and memorable words or phrases. This makes the service extremely difficult to use, not to mention that consent to access your bank account will only last for a maximum of 90 days and then you'll have to go through the whole process again. An account balance needs to be struck between security and convenience, and certainly the ability to authorise and give consent once, then continue to use that access, needs to be included in the service in the future.
It is safe to assume that a large number of us have regular payments that are coming directly off our credit or debit cards, but it is likely that does not many of us could name all of them – the gym membership, that online magazine subscription that you really must get around to cancelling, and so forth. But how do we get a consolidated view of all of those recurring payments? Well the reply is, without carefully checking your statements, you cannot. Open Banking already offers users the ability to see all the authorisations that they setup through Open Banking, and allows them to cancel those authorisations quickly and easily through their bank. Cancelling a subscription from five years ago probably requires you to close that credit card down.
Open Banking can revolutionise the way we bank in the UK, but we haven't finished your way yet. The retail banking industry needs to make the service much easier to use, and that we need a trusted provider with a killer app to drive adoption. Only then can we see real innovation in the market.