Moving from Open Banking to Open Finance

In December 2019, the Financial Conduct Authority (FCA) launched an industry consultation on Open Finance, which explores how open-banking type access could be extended to other sectors such as mortgages, insurance and pensions.

We recently submitted a response to the FCA focusing on on three key themes:

1. Make open banking work today. Open banking is still being implemented. The FCA and industry need to focus on finalising open banking.

2. Encourage aggregators to compete. Aggregators have the expertise and experience of building and maintaining APIs. Rather than introducing a standard API, we believe that regulators should encourage competition by allowing firms that specialise in API development to compete on quality.

3. Regulate the retrieval of data. Under PSD2, the displaying of consolidated payment account information is the regulated activity of Account Information Services (AIS) and it is the activity that is regulated, not the actual retrieval of data. This limits the number of firms who can enter the market and provide innovative services.

The FCA is taking the lead on exploring how best to expand data access beyond open banking, but there is still much work to do before Open Finance becomes a reality. We expect this development to take months if not years. It will not be a big bang but rather a slow burn as sectors, providers, fintechs, and regulators work together to understand how best to expand data access.

Contact Plaid to learn how we can support your open banking initiatives. And check out the other posts in our Open Banking series:

• Open banking: Should I build or partner?

• Open-banking-as-a-service: what does that actually mean and how does it work?

• Reviewing open banking on a global stage