Broadening the scope to all of finance
The PSD2 and Open Banking regulations broke open the silos around an important part of banking: payment accounts. For a full picture of a person’s financial status or for truly sophisticated financial services, however, more financial information and access needs to be included.
Consider mortgages, savings, credit and investment accounts, pension funds and the broad variety of insurances that most people carry – ideally, the same freedom would apply here as well. That’s what the FCA has in mind for open finance.
This would take the benefits of open banking to the next level. Instead of being able to easily move money between payment accounts, people could manage their entire financial footprint with the same ease. Having access to the exact financial products people use, instead of merely their reflection in the transactions on a payment account, could help people save money through true automated switching and renewal services. And of course, a more complete picture of a person or company’s finances could give them access to faster, cheaper financing and debt advice.
Open banking is the foundation
The groundwork laid throughout Europe in the last 2 years, since the rise of open banking, is an excellent start. Governments and regulatory entities have navigated issues around privacy, reliability and trust. Banks and TPPs alike have wrestled with and found their way through the requirements for API creation and management. And consumers have seen the rise of interesting new services – and of entities focused on their protection.
Of course, open banking itself is still in its infancy, with full flowering some years away. With their call for input, the FCA wants to be ready when that time comes, so open finance has the best chance of starting out right.
Join the FCA’s call for input!
You have until October 2020 to provide your input to the FCA. They’re looking to hear from a wide range of people and businesses, from banks to consumers, to insurance companies and intermediaries.
At YTS, we’ve been involved in the kick-start of Open Banking. We definitely intend to play our part in the rise of open finance as well. And, if open finance becomes reality, we will of course expand our YTS API to connect to the variety of new account types that will then open up for access. This should eventually help consumers and businesses alike to get better financial service which meet their needs and desires.
In the meantime, let’s work together make open banking reach its full potential.