Open Banking trends to look out for in 2021
The UK is a pretty divided nation right now but if there’s one sector that is actually closing ranks, it’s the commercial finance sector. Indeed, there’s one recent UK banking trend that underlines this commitment to making banking easier and more inclusive – open banking. Open banking was launched in 2018 by the Competition and Markets Authority on behalf of the UK Government to give people more options and greater consolidation of their finances.
It’s about transparency and letting third parties develop apps that allow users to manage all of their financial concerns from one centralised location. It gives people more flexibility and allows financial institutions to more easily transfer data. In short, it makes things easier for everyone. But what trends are we expecting to see manifest in open banking over the next 9 months?
Open banking allows consumers to decide where they share their data. While more transparency means banks won’t be able to overcharge for their services it also means users being more open with their banking information. This could prove a bitter pill to swallow for many. So this year, expect banks to be embarking on progressive and aggressive marketing campaigns to underline the safety and security of their open banking platforms.
Adoption picking up
Things got off to a slow start for open banking when it first kicked off in 2018. Many banks were struggling to get their heads around the regulations and this meant there were some that just decided it was better to hold off until they could stand on steadier ground, so to speak. In 2019, Lloyds were one of the first major banks to join the party and the other big hitters followed suit. Customers are still trickling in, of course, but expect that to change as we move further into 2021 and more of us are struggling to cope with our spiralling finances.
It was the passing of the PSD2 regulation that allowed open banking to take place. However, that passed 3 years ago now and we are still only just starting to see adoption rates tick up. A YouGov poll suggests that 72% of UK adults have never heard of open banking and only 18% are aware of what it actually means. So, what’s the biggest open banking trend we foresee taking hold in 2021? Education?
Educating the masses
Open banking is perhaps the most transformative thing to happen to UK banking in generations. the OBIE feels open banking could be worth £18 billion in value by the end of the year so we’re certainly not alone in our thoughts. In essence, it’s going to be all about making banking more straightforward for millions of people. And with the kind of year we’ve all had, “more straightforward” is something to which we can all raise a glass.