Super Saturday is upon us.
To be more precise, what I mean is that Open Banking kicks off tomorrow, Saturday 13th January. I'm not quite sure why a Saturday was chosen, or why the 13 (let’s not be suspicious), but suffice to say that Open Banking begins on that date.
And although we can't expect a Royal Fanfare, or ticker tape parade along the Mall, we can at least welcome in one of the most significant developments to happen in the banking sector for generations. What we've argued for and lobbied now for years, has finally come to fruition.
For any of you who don't know what Open Banking is (where have you been for the last five years), it means that consumers will be able to enjoy a new sense of freedom with their financial data. In short, people will be able to share their data between each of their financial institutions, meaning they can not only see their situation on one platform, but also get better deals from their banks. This puts the power into the hands of the customer, not the people running the bank.
And importantly, customers have to opt-in and renew that position every three months, which ensures that they will be engaged on at least a primary level.
It may have taken around ten years for Open Banking to happen, and had many of us in the FinTech sector banging our heads against a seemingly solid brick wall, but we're here at last.
Open Banking is what the banking customer has needed for years. In fact, it’s what the customer has deserved for years. And what the banking sector has singularly failed to deliver. To say that the traditional banks have been reluctant to adopt Open Banking is an understatement and this is reflected by the fact that some of the UK's major institutions have had to ask for an extension in order to get themselves ready.
Banks have never been that good at sharing data, have under-invested in IT and not appreciated the advances that can be made with APIs. It has been the FinTech sector which has made the running and it is they who have moved the financial sector from the dark ages quickly into the 21st Century.
The problem is of course, how will customers react? Remember the old saying, you can lead a horse to water, but can you make it drink? Can we get the customers to start enjoying the benefits we’ve fought for over the years? The latest figures suggest that only around 3% a year choose to change their bank. The UK banking customer is extremely conservative, so how will they react to new APIs and new systems designed to improve their lives?
What’s more, consumers will have no idea what an API is, nor will they use APIs directly themselves (can your average consumer write code?). Therefore, they will need educating on the value they get by using such services (e.g. from FinTech firms and/or banks themselves) that use Open Banking APIs. Importantly, APIs are the starting point and an industry will develop around using these APIs for the benefit of consumers.
Only time will tell how this will all pan out, but the signs are that things are changing, that there are enough early adopters out there to boost a dynamic change over the next decade.
So, we can’t call Sunday a day of revolution (no-one is manning the barricades and about to scale the inner sanctum), but we can see it as a major step forward, one that will go down in history as the day when the banks had to open their doors.