Open Banking’s soft launch may be one week away, but all of us at Yolt have been busy preparing behind the scenes for over a year. Yolt’s own in-house expert, Leon Muis, joins us on the blog today to answer some questions on Open Banking and Yolt’s own role, both up until now and going forward.
What is Open Banking?
It depends on how you look at it, but I like to think of Open Banking as the combined effort of the government, banks and third-party providers (including Yolt) to reinvent the banking ecosystem and make it really work for each and every customer. Banks will now be required to make personal banking data available to each customer, empowering them to share their data with third parties (or other banks). This will enable customers to get the best deals and experiences available to them.
We went into more depth about this on the Yolt blog, which you can read about here.
What is the driving force behind Open Banking – why is it happening now?
Back in 2016, the Competition and Markets Authority published their investigation into the UK’s retail banking sector, paying particular attention to the competitive landscape of the current account market.
It’s a pretty long read, but in essence, they concluded that major banks don’t have to work hard enough for their customers while new banks and financial providers were struggling to reach customers at all. This type of ecosystem offers no benefits to customers because it puts a major limitation on their awareness of and access to better deals and opportunities. For example, very few people switch their current accounts despite the varied options available to them.
To combat this issue, the CMA Order has since required the UK’s 9 major banks & building societies (RBS, Lloyds, HSBC, Nationwide, Santander, Danske Bank, Bank of Ireland, AIB, and Barclays) to open up their APIs to third parties and other banks, creating a more competitive landscape for their customers. These first stages of Open Banking are rolling out as a soft launch on January 13th, 2018.
What do you see as the key benefits for the everyday person, especially in the early days of 2018?
In the future, the possibilities are really endless, but, for now, I think the big game changers include things like:
1. A fast and secure way to connect your bank account to an existing, secure product (like Yolt, for example).
2. A fair and personal way to compare different current account offerings – each customer will get a tailored experience, so they can get the best deals available to them.
3. It’s also going to help users get more engaged with and on top of their finances – that’s what Yolt is all about.
How is Yolt already leveraging the principles of Open Banking?
Yolt has been actively involved from day one, participating in all of the active working groups and helping to shape Open Banking and how it’s being tested. We’ve been personally attending a lot of these sessions to help shape the mutual benefits.
From a tech perspective, we’ve been leveraging the benefits of the API landscape for a while now– our recent integration with Starling Bank is the perfect example. Our users can now connect their Starling accounts in a matter of seconds, and has been extremely popular with our community so far.
How will Yolt be leveraging these benefits in the coming months?
We’re aiming to connect as many of the CMA 9 as possible. We’ll have the first few right from the get go on the 13th, and, as always, we’ll be focusing on testing and learning from our community. Initially, we’ll be working with a closed group of testers to perfect the experience.
That said, the adoption of big changes tends to move slowly. Ten years ago, nobody thought contactless would take off, but look at it now. Like contactless, the mass adoption of Open Banking will probably be gradual. So, our focus is all about making that transition as seamless and user-friendly as possible.
What makes Yolt especially unique in the Open Banking landscape?
Yolt exists independently of your bank accounts, so you can keep all of your personal data regardless of your history with any specific bank. In other words, if you switch banks, you won’t have to leave your data behind. This is great, because it gives you more control over your current and future financial situation than ever before!
Yolt is also already making it easier than ever for people to understand and manage their money. With the introduction of Open Banking and PSD2, we’re looking forward to giving our users more benefits than ever before. You can read more about Open Banking, PSD2 and their benefits here.
Open Banking is all about having the power to choose what you do with your data. So, if you’re uncomfortable sharing it, then you don’t have to. That in itself is pretty revolutionary, because pre-Open Banking, customers had no real control over or possession of their own data.
From a security perspective, all companies operating under the Open Banking structure are measured according to the highest standards of privacy and security. This includes the Financial Conduct Authority or their National Competent Authority, which in the case of Yolt would be the Dutch Central Bank.
If you’re keen to get a clear, personalized view of your spending and really take control of your money, I would highly encourage anyone to get on board with Open Banking and give it a try. And, as I said, it’s all about choice, so if you do try it and then change your mind, Open Banking gives you the control to revoke access to your data at any time.
Have a question about Open Banking? Join the conversation by tweeting us at @getyolt!