Open Banking: Game-changer or reputational minefield?

Mike Robb

You could be forgiven for not knowing that Saturday marks a significant day in the future of banking. This ‘quiet revolution’ is set to change the way we all manage our finances.

The powers behind these reforms would ideally like this blog to be headlined: ‘Open Banking to revolutionise financial services’. That’s what we’re being promised, but the gap between that promise and what will happen on Saturday could be very damaging.

There is a lack of discussion about the potential short-term pitfalls that could emerge from this long-awaited moment. The promise of a more open banking system is inherently welcome. After all, this is the moment consumers are given greater choice, flexibility, transparency and an enhanced customer experience that should bring us all into a new era of banking.

This underlying concept is hugely exciting. Who wouldn’t be eager to see this new age dawn? Apart from, perhaps, a quiet murmur or two within some incumbent banks.

For those of you less attuned to the latest TLAs (three letter acronyms) in the industry, picture this: one app or website giving you access to every financial account you hold. Your current account, savings, mortgage and credit cards all in one place, and long-term likely even more – your pension, phone bill, water, energy, and so on.

The promise of a more open banking system is inherently welcome

What is not to like?

But there is good reason for leaders across the sector to be sleeping restlessly in the short-term as we go through the bedding-in process. The tech challenges faced by the big banks in implementing Open Banking cannot be understated. In fact five of the nine providers (eight banks and one building society) that were mandated to get their systems ready have said they will not meet Saturday’s deadline.

From a comms point of view Open Banking will score a big own goal if the big launch and the months thereafter are memorable only for technical failures.

A case in point: Last year a friend connected their current account, held by a bank that was already operating to Open Banking standards, to an app that aggregates accounts. The process caused a security alert, he was locked-out of his account for ten days while new security details were sent to him – by post. A case in point if ever there was one that banking is ripe for disruption, but nonetheless a process that caused serious financial stress for a short period.

If thousands of customers had a similar experience Open Banking could be dead in the water before it even gets off the ground.

Give it 12 months and we will be in a different place. With the tech known to work, the challenges completely change: a need to build consumer awareness, drive trust in security, and counter consumer inertia by explaining what Open Banking (and all those TLAs) actually mean for ordinary consumers.

I’m convinced Open Banking will be a huge success. But the idea that it just arrives and the industry is changed overnight is nonsense. There are some very big bumps in the road ahead and 2018 should see the biggest of all.