In considering Open Finance, an analysis is needed to decide whether any specific activity is currently a regulated activity and, where it is not, HM Treasury will need to decide whether a provider should be regulated and subject to FCA standards and supervision. Open Banking standards around app-to-app redirection have really helped here. While neither the FCA nor any other regulator should tell firms what these should be, the way we regulate can actively support healthy forms of competition. would they afford equivalent access to customers’ interfaces. We think Open Finance could improve the financial health of consumers and businesses by helping them manage their savings, loans, investments, pensions, and insurance much better and improve their access to financial advice.Our assessment shows that some UK retail banks are ready to deliver Open Banking via API, but others have struggled to encourage third parties to connect. Who should have access to data and for what purpose?
Where the providers has “read-only” access, the provider could collect a customer’s financial data to present to them (perhaps aggregated with other data). They’re now a commonplace tool for connecting software, systems and enabling interoperability. It takes this idea and seeks to apply it far more widely. While the FCA considers that Open Banking has been successful and that Open Finance is the means to introducing more innovation and competition (and it is backed by the Government in this view), there is an opportunity to learn the lessons from the roll-out of Open Banking, and to improve the model before it is applied more widely.
making an investment or applying for credit).The consultation paper represents an opportunity for firms to contribute to the development of policy in this area. The FCA points out that investment in this area will, of course, take away resource from other areas of firms’ businesses.Feedback is due by 17 March 2020. The FCA refers to a “privacy premium” where those customers who are unwilling to share their data will pay more.
It could revolutionise the way financial markets work for consumers, changing existing services, improving competition, and spurring innovation. Within an Open Banking context, APIs provide a dedicated and secure way for one financial company to access the customer data and payment functionality of another.
Unlike Open Banking, which is concerned with bank accounts and payment services only, the impact of Open Finance would be much wider, affecting mortgage providers, consumer credit firms, investment and pension funds, as well as general insurers and intermediaries.The Call for Input also recognises that many of the outcomes in terms of customer benefits might be achieved through more conventional means and moreover, that the success of Open Finance is dependent on customers being prepared to engage and willing to allow third party providers access to their personal and financial data.