Open Banking, One Year On

Peter Walker
April 25, 2019

2019 marked the first year since Open Banking was rolled out to small businesses and consumers in the UK, which means it is a perfect time to take a retrospective look at how it has impacted the industry, provided by Information Builders.

Industry experts assert that the APIs used by Open Banking apps are far more secure and standardised than previous methods used to share data between financial providers.

The Open Banking initiative was driven by the UK’s Competition and Markets Authority (CMA) to improve financial services, give customers more choice between financial service providers, and provide consumers with access to cheaper financial products. Meeting these goals depends on consumers granting access to their financial data to FCA-authorised and regulated financial service providers.

Currently, there are 101 FinTech firms and banks signed up to securely share Open Banking data via application protocol interfaces (APIs) – the tried, tested, and trusted method by which online service providers have shared data for decades. While our natural instinct is to shield our financial information, industry experts assert that the APIs used by Open Banking apps are far more secure and standardised than previous methods used to share data between financial providers, which essentially consisted of a screen scrape, including customer’s log-in details.

The Open Banking Implementation Entity (OBIE) predicts that “Open banking will help make Britain one of the best places in the world to bank and will, in time, stimulate the digital economy.” It is anticipated that global FinTech providers, regulated by their FCA equivalent bodies, will also adopt the Open Banking API technologies.

Speaking in a Financial Times Money podcast, OBIE trustee Imran Gulamhuseinwala commented that, although consumer understanding of Open Banking is still limited, once people see the convenience, value, and financial benefits, they will be more likely to give consent for third parties to securely access and analyse their financial data so that they can offer them better rates.

Examples cited are the digital receipt and loyalty points app introduced by Flux, which saves Barclays’ customers time and money, and removes the need for a physical loyalty card, and the Account Aggregators introduced by HSBC and Lloyds, which allow consumers and businesses to use their own data to analyse their spending patterns and identify the best deals.

Open Banking will be extended this year to cover all products with payment capability and promises to ‘revolutionise’ banking for small businesses and retail banking consumers. However, while APIs enable data to be securely shared without requiring customers’ login credentials, global adoption of Open Banking apps will hinge on providers’ abilities to process huge volumes of data.

Our customer, Worldpay, a payment processing company, processes around 23 billion transactions a year for 800,000 merchants. Many Worldpay merchants want to analyse their transaction-level payment data: “Big data has changed industry dynamics and opened up new opportunities for nimble companies that can store, process, and especially analyse payment data,” explains Sujit Unni, senior leader of technology at Worldpay. “It used to be prohibitively expensive to store tens of billions of transactions, and very time-consuming to process it all. For example, it might take an hour-and-a-half to process a hundred million records. With our current big data architecture, it takes less than 20 seconds.

“Previously, our ability to extract customer insights was limited. All we could do was access aggregate data. With WebFOCUS, we analyse detailed merchant data at the transaction level to develop more precise pricing models.”

Information Builders’ data and analytics platform is built for scale. That’s why nine out of ten of the largest U.S. banks, five of the largest Canadian banks, and 83 percent of the largest financial institutions rely on our technology for business intelligence and advanced analytics.

We look forward to assisting all of our banking and fintech customers as they prepare to join the Open Banking revolution.

How did WebFOCUS revolutionize Worldpay's big data architecture?