Now is the time to realise the potential of open banking
We should roll out open banking to open everything, setting the new global standards for simple, safe data sharing in future and establishing a strong digital image of a new post-Brexit global Britain.
When was the last time you switched to a different bank? This week? This decade? Ever?
For most of us, no matter how much we may grumble about unexpected account fees or lousy foreign currency rates, the answer is ‘never’. And that’s not so bad if we’re broadly happy with what we’re getting. For lots of us, life is too short to spend time worrying about a service that’s fairly trouble free, and which lets you manage your finances from your phone wherever you are.
But sometimes it really isn’t OK. If you want a better deal from your bank but whoever has your current account won’t play ball or wants to charge a small fortune, you’ll want to shop around. And that’s where the UK is sitting on a hidden gem. It’s called open banking, and it means you or I can ask our bank to send any of our financial details to a competitor or a financial advisor, to see if they can find us a better deal.
It’s simple and secure, and it upends the balance of power between banks and their customers. Gone are the days of putting on a suit and tie to impress the bank manager; they know they can’t take anyone who uses open banking for granted anymore, because it’s suddenly so easy for you or me to see if we’re being quietly ripped off, and to take our business elsewhere whenever we want.
Open banking has created a recipe which doesn’t have to be limited to current accounts and high street banking
Best of all, we’re leading the world in this area. No-one else has got as far as us, although plenty would love to catch up. But as long as we’re ahead, it makes our financial services and ‘fintech’ firms more globally competitive too; if we have the most creative and competitive financial sector in the world, British firms will be better prepared to win exports abroad as well.
Except that there are clouds on the horizon. We may have been first, but open banking’s mandate is due to run out later this year. If we don’t do something by then progress will stall and, in an industry as fast-paced and creative as finance, that means we’ll be overtaken and our lead will be gone. Now isn’t the time to slow down or, worse still, to stop altogether: it’s the moment to think big instead.
How? By realising that open banking has created a recipe which doesn’t have to be limited to current accounts and high street banking; it will work for big swathes of the rest of our economy too. Why stop at open banking when you or I could use the same approach to get better deals on loans to grow our small business or buy our first house? Or for open energy, open telecoms, or even open online groceries too?
In other words, we shouldn’t be shutting open banking later this year and marking time until other countries overtake us. We should be extending their mandate for another three or four years, and telling them to roll out what they’ve done to create open everything, covering lots of the rest of our economy as well. It would give you, me and business leaders better deals on pretty much everything, and create the same ‘if you can win in Britain then you can win anywhere’ export vibe that’s already begun in our fintech and financial services industries too.
Last but not least, if we can maintain and extend our lead so we aren’t just the first to create open banking, but the first to build open everything too, then Britain can be the founder member of the new global standards which will surely be needed for simple, safe data sharing in future. The standards for things like the Internet or the World Wide Web already exist, and are kept up to date by international bodies based in America. Why couldn’t we do the same for international data? What stronger, better and more digital image of a new post-Brexit global Britain could there be than that?
John Penrose is the Conservative MP for Weston-super-Mare.