If you’re au fait with 90’s dance music you’ll remember John Lydon - the gobby Sex Pistol and Public Image Ltd. frontman - screaming the battle cry ‘Open up’ on the Leftfield song of the same name. Funnily enough, this brings me on to think about the current state of the banking industry and financial regulation*
Open banking has hugely transformed the banking industry since it launched in January this year. This open sourcing is akin to handing the keys to the castle to the consumer, meaning that banks are now required to share a user’s data with third party companies if requested by the customer. So what does this mean for the consumer? In short, like GDPR, it gives them control of their data, allowing them to shop around and take their custom to companies that are unburdened by the heavy compliance of the big banks.
Too big to fail? Think again
It’s no surprise that Open Banking is already big business. According to a recent PwC report Open Banking could quadruple in size and be worth £7.2bn by 2022. This poses an obvious competitive threat to the traditional big banks. They can no longer rest on their laurels, providing a so-so (or substandard) service to customers out of pure complacency or the fear of change. There will always be a challenger waiting in the wings to swoop in and poach a customer, and Open Banking will only serve to increase this competition.
“I’m going through changes”
Of course, being big doesn’t mean you can’t innovate and ‘traditional’ isn’t a dirty word. GDPR has reset the balance with the customer and company dynamic, and end users are more aware of their rights and what data they control than ever before. As customers become more woke the big banks will also have to wake up or risk being left behind - driving innovation in the process and delivering a better service to end users as a result.
The old adage goes that cash is king. By opening up regulation, especially in a historically conservative industry, the consumer is now king. Welcome the change.
*on a similar 90s note, ‘Regulate’ by Warren G also springs to mind.