The ins and outs of open banking: An interview with CBO Leon Muis
From September 2019 onward, all European banks need to have an API available for open banking connections under the PSD2 and Open Banking regulations. Behind the scenes, Yolt Technology Services (YTS) worked hard to be able to jump on the new opportunities to arise after this deadline. YTS’s in-house expert, Leon Muis, answers some questions on open banking and the role of YTS, both up until now and going forward.
What is open banking?
Leon: I like to think of open banking as the combined effort of the government, banks and Third Party Providers (with Yolt being one of the first and most prominent) to reinvent the banking ecosystem and make it really work – for consumers and businesses alike. Banks will now be required to make personal banking data available to their customers, empowering them to share their data with third parties or other banks.
How did open banking start?
Leon: Back in 2016, the Competition and Markets Authority (CMA) published their investigation into the UK’s retail banking sector, paying particular attention to the competitive landscape of the current account market.
They concluded that major banks don’t have to work hard enough to keep their customers. At the same time, new banks and financial providers were struggling to reach customers at all. This type of ecosystem offers no benefits to customers, because it really limits their awareness of and access to better deals and opportunities. For example, very few people switch their current accounts, even though many options are available to them.
To combat this issue, the CMA Order has since required the UK’s nine major banks and building societies (RBS, Lloyds, HSBC, Nationwide, Santander, Danske Bank, Bank of Ireland, AIB, and Barclays) to open up their APIs to third parties and other banks, creating a more competitive landscape for their customers. This was the Open Banking regulation, and its first stages were rolled out as a soft launch on January 13th, 2018.
Simultaneously, the PSD2 regulation was being formulated in Europe. This legislation had the same aim as the UK’s Open Banking: to give power back to customers by returning the ownership of their data to them. The PSD2 regulation went into effect in February 2019 and required that all European banks must have an API ready for third parties to connect to by September 2019.
What do you see as the key benefits for consumers?
Leon: For now, I think the big game changers include things like:
1. A fast and secure way to connect your bank account to an existing, secure product.
2. A fair and personal way to compare different current account offerings – each customer will get a tailored experience, so they can get the best deals available to them.
3. A good way to be more engaged with and on top of your finances.
And in the future, the possibilities are really endless. For financial institutions, fintechs and other interesting parties, the limit is only their creativity. With YTS, we are very curious to see what people will come up with. That’s why we’re offering our own API, the platform we use to connect to banks, as a service to other TPPs.
What makes Yolt Technology Services unique in the open banking landscape?
Leon: As a company, YTS has been actively involved from day one, participating in all of the active working groups and helping to shape Open Banking and how it was tested. I’ve been personally attending a lot of these sessions to help shape the mutual benefits.
From a tech perspective, we’ve been leveraging the benefits of the API landscape for a while now – we made our first connection to a bank API right when Open Banking launched in January 2018, connected the CMA9 banks by September 2018 and have been adding banks across Europe as their APIs have become available.
Back then, we were focusing on providing a better service for users of the Yolt app – giving them the option to add their accounts in a matter of seconds. Now the Yolt technology platform is also being made available to businesses, these early wins benefit even more people.”
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