What Can An API Do? Pretty Much Anything

17. April 2018.

“Equally, how do you get customers to switch from banks to fintech firms, when they’re happy with the service they’ve got?

The biggest switch movement in the U.K. came around from Santander, but it was costing them a billion pounds a year with the 123 account that paid higher interest rates than any other U.K. bank account.

It did get people to switch but at a very high cost—which is why they’ve dropped it.

People rarely switch bank accounts, and this is the real challenge for the challenger banks. These challengers claim that it starts with gaining their trust through usage. So, you start as a secondary account and then the challenger can use the Open Banking API economy to give information enrichment.

That’s what Monzo, one of the leading U.K. digital banks, does. Over time, you find you’re always using the challenger’s app and so why are you still with the old bank? It’s at that point you switch.

That is the idea anyway, but it begs the question: How many challengers will really challenge the big banks versus be acquired by them?

This is what has happened with Simple and Atom, which are now owned significantly by BBVA, and many start-ups want the same end game: to be acquired by a big player at a high cost.

Open Banking no comfortable ride

Bringing that back to Open Banking, there is a lot of fear, uncertainty, and doubt (FUD) about it.

This was evidenced by the way the mainstream U.K. consumer press all said you’d be hacked and defrauded if you allow third-party access to your bank account, even though the regulator has forced it to happen.

It’s obviously not true—why would a regulator bring in a regulation to make you less secure?—but the FUD works.

For example, if a third-party compromises your data, who is liable? Where is the burden of proof?

Generally, it is with the bank. Equally, GDPR—the General Data Protection Regulation—makes this a tricky one. How can you share all the customer data when the other regulation is telling you not to?

This has all been driven by E.U. regulations for Open APIs around payments. The U.K. has gold-plated the regulations, and made it into Open Banking, and the bottom line is that banks are being told to open up their data and processes to third parties.”

We will be happy to hear your thoughts

Leave a reply

Register New Account
Login to Detarplus.com
Reset Password