As the 21st century approaches the end of its first quarter, for the self-proclaimed ‘cool kids’ of financial services the new buzzword is ‘open banking’: the system of allowing access and control of consumer banking and financial accounts through third-party applications.
Open banking does not look the same in every country. In the UK and the European Economic Area, it’s driven by a regulatory approach with banks obliged to act and develop the framework for solutions to emerge.
In the US, Singapore and India, it’s driven by a market-led approach, which may lead to greater and faster innovation but inconsistencies in rules and regulations.
We see open banking as a major opportunity to transform financial services. Yes, the same was said for fintech but open banking, in theory, puts the end user in charge if the correct environment is created.
David Fagleman and David Hensley, Payments Consulting Network's Associates, developed five principles they believed should underpin open banking and ultimately be used to judge its success.
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