It is hoped consumers will have more choice and better financial products after the UK’s largest banks are obliged to share customer data (when authorised) with third parties from next year.
Under the changes, consumers could be offered new products and services that were previously “impossible to imagine”, according to a report by financial services firm Deloitte.
It predicts that financial customers will have fewer touch points with different companies and instead use a single platform to access services from a range of providers – in a move that echoes the rise of price comparison sites.
Deloitte predicted, for example, that banks may bring together all the different players needed to buy a home under one platform, including estate agents, solicitors and mortgage brokers to offer a single home-buying service.
However, the platform offerings could come from technology giants, fintech start-ups or price comparison websites, taking the customer relationship away from traditional players, the report warned.
The exchange of customer data is set to erode the advantage of financial stalwarts and increase competition, the research suggested.
But the changes could relegate many companies to simply a back-end product or infrastructure provider.
Risk to banks greater than ever
Neil Tomlinson head of UK banking at Deloitte said: “The threat to the traditional banking business model is real. Fintechs, tech giants and price-comparison websites, for example – could come to own the customer relationship.
“As a result, these could potentially become the leading brands in banking – without ever taking customer deposits or lending onto their own balance sheets.”
Tomlinson said the risks to incumbent banks were greater than ever but so were the opportunities.
Open Banking could mean new sources of revenue and new propositions, coming from strong brands with existing customer relationships – such as the home-buying process outlined.