Clearly, the first tranche of customers to whom open banking was offered were those with current accounts. Although take up to have a single view of all your accounts in one place appears to be relatively slow among CMA9 customers in general, there is definitely more of an acceptance of the principles of sharing of data within the younger population than those that are older.
At the end of the day, the use of social media within millennials is completely the norm, and even with the well published problems with the Cambridge Analytica scandal, the number of Facebook users continues to increase, as do their profits, which were up 39% to £16.9bn in 2018.
One of the areas highlighted in the Facebook scandal was the use of screen scraping which is the collection of data from one application and translating it and presenting it in another. Interestingly, the next phase of the European Payment Services Directive, PSD2, to be implemented by September 2019 tightens up further the access of customer data, which includes banning the use of screen scraping.
Slowly but surely
So where is the likely take up of open banking principles to come from next? A lot will depend on institutions’ appetite for risk, so we can expect that more conservative institutions, such as some building societies, will hold back and wait to see how the rest of the industry brings solutions to the market before dipping their toes in.
No one wants to be the first to have a security breach associated with open banking and so there will be many institutions that take this approach.
Software suppliers such as Phoebus Software, have created a digital strategy around application programming interfaces (APIs) ensuring the ability to send and receive data securely with other systems, in order to effectively meet the requirements for open banking.
This gives lender clients the ability to integrate their mortgage servicing software with their other systems when they wish to do so; it also enables them to interface with other suppliers as necessary to form best of breed “technology stacks”. This is essential where lenders and third party servicers want or need to use different suppliers to make up their overall solution. A perfect example of this is Atom Bank for whom this approach works particularly well.
So are we ready for open banking in the mortgage industry? I believe we are prepared, but take up will depend on both the appetite for risk and also customers being willing to share data. However, more and more examples of published APIs are becoming available to make the lending process slicker, and this will only add to the drive to make the principles of open banking happen reach critical mass.
