CCR Magazine

You are here  :Home arrow News arrow Open Banking will lead to fundamental shift in operating models
Contact Us Newsletter Signup RSS Feeds

Latest News Headlines

Headlines

 
Commercial Credit News

Headlines

 
Open Banking will lead to fundamental shift in operating models PDF Print E-mail
Monday, 06 November 2017
Open Banking is an existential threat to traditional banks, according to the Future of Finance, a new piece of research released today at Personal Information Economy (PIE), the UK’s leading personal information event.

The qualitative research, conducted by Ctrl-Shift, the specialist business consultancy, and Callcredit, the UK’s fastest growing and second largest consumer data agency, interviewed leading figures from traditional banks, challenger banks and the wider industry.

Open Banking will expose banks to new competition, by forcing traditional banks to open their API (Application programming interface) to third parties. This will give competitors access to banks’ enormous data collections.

According to the research, banks have underused this data, due to their complex systems and older technology. However new, more digital competitors will use the data to target the most profitable parts of a bank. In a worst-case scenario, this will leave banks saddled only with unprofitable products, like current accounts.

The research concludes that Open Banking is an opportunity for banks to enhance their services, but warns that those who do not act now could need a government bailout in the next five to seven years.

Mike Gordon, CEO, Callcredit Information Group, said: “Open Banking is an important development for the industry, it will bring greater competition and new ideas to banking. This means that traditional banks are likely to create exciting products to retain and grow their customer base.

“Yes, it could pose a risk to banks’ operating models, but I believe that they will use Open Banking to innovate and grow.”

Liz Brandt, CEO, Ctrl-Shift, said: “Banks have a real challenge on their hands. Open Banking is an imminent threat, which banks will struggle to respond to due to their large, cumbersome structures. To survive, banks will need to think and act fast.

“I believe that we will see some clever solutions, such as the creation of ‘lifeboat’ banks. This is an approach Midland took years ago when it set up First Direct.”

Tech titans to enter banking
In addition, Open Banking is likely to see at least one major technology company – namely Google, Amazon, Facebook or Apple – enter the banking market. The research argues that these companies will look to either acquire an exciting challenger bank, such as Monzo or Starling, or provide payment solution services.

In addition, Future of Finance suggests that Chinese companies will look to enter British retail banking. It argues that Alibaba, Tencent and Baidu will all look to enter the market due to Open Banking, with these companies already providing payment services in China.
 

 Forums International Ltd

Forums International Ltd

 Attendance at your first meeting is free of charge, and please quote reference 'CCR2016' to receive the special 10% discount off of your first annual subscription.

Find out more here.

latest issue

CCR Cover

The latest edition of CCR Magazine, the leading editorial publication in the UK credit industry, is out.

Read the latest issue online

subscriptions

CCR is the premier magazine for consumer and credit professionals. It provides an independent voice to the industry, breaking major news stories and running in-depth features.

As a magazine, it works with and campaigns on behalf of the credit industry to promote its importance as a centre of potential profit and business development to the wider business world.

Subscribe to CCR Magazine

CCR World Magazine


 

Providing information and analysis for thousands of senior credit professionals worldwide, every quarter.

Find out more

GTS Media Ltd
81 Cambridge Road
Southend-on-Sea
Essex
SS1 1EP

Registered in England No: 05483197