Alasdair Smith, an inquiry chair at the Competition and Markets Authority (CMA), said banking customers are not willing to give their permission for their data to be shared with anyone without the right safeguards.
According to the CMA, UK banks will mandatorily have to implement the open banking data security standard by early 2018. This will allow consumers and business owners to share their account data with third parties and other banks. Apart from that, the change will allow them to manage multiple providers through the use of a single app.
The different systems will be linked together via application program interfaces (or APIs for short).
Smith commented that using open APIs would allow customers to be in control over what information is shared and with whom. He also said that they are requiring the release of information to be done in stages, ensuring that consumers’ data remains secure at any given time.
Smith believes the new open banking standard will transform the financial services sector. According to him, there will be commercial winners and losers as a result of this radical change.
Since the implementation of an open API standard will enable authorised personnel to access information about bank prices, service quality, as well as the services themselves, new customer-tailored services will become available as a direct result of the open banking standard being implemented. According to Smith, these might include third-party lending services for small businesses, which will need to be regulated.