As the Scotsman writes the race is on for Open Banking, and there is a unique opportunity for Scotland’s Fintech innovators to lead it, a viewpoint written by one of the local pioneers Money Dashboard.
The country has a deep history and presence in banking, and a highly innovative tech sector – The intersection of the two offers a hyper-accelerating opportunity for Scotland’s economy.
What is Open Banking
The term refers as you might expect, to the use of open standards within the banking sector, to encourage and enable better interoperability between the banks, to achieve more integrated consumer services.
Banking Technology explains What You Need to Know, and Michael Gardner provides this excellent overview, highlighting the challenges and opportunities the trend will present, how banks will need to master better UI strategies and the use of APIs. The Open Bank Project lists a plethora of exciting startups pioneering different niches it exposes.
The enabling catalyst is open standards. The Open Banking Implementation Entity was created by the UK’s Competition and Markets Authority to create software standards and industry guidelines that drive competition and innovation in UK retail banking, and they released Version 3.1 of the Open Banking Standard in Aug 2018.
Research from The Financial Brand shows just how important and impactful the trend will be for the banking sector:
Innovation and Best Practices
Scotland experiences the same issues locally that defines market needs globally, presenting the opportunity for a powerful bootstrapping cycle of pioneering and proving them at home first, then exporting those solutions internationally.
For example half of Scotland’s smaller firms believe they get a raw deal from their banks, writes The Press and Journal. The ongoing closure of branches and ATMs impacts communities heavily especially those that are remote.
Featured Digital Scots
Renovite is an example of a Fintech building innovations for these types of challenges locally in Scotland. They’re moving ATMs into the Cloud, meaning entirely new ways of deploying them will be made possible, creating the potential for innovative solutions to those needs.
Sharing of data between banks will encourage smarter services, better informing consumers about more competitive offerings, and Edinburgh-based The ID Co. is another startup pioneering this type of integration-based service.
And not only are they bringing their own products to market, they are actively cultivating an Open Banking innovators forum for others to learn from their experiences.
Open Banking Excellence is an open forum think tank that meets monthly for anyone in the industry. Join this year's first meetup:
— The ID Co. (@the_idco) January 15, 2019
Importantly there is a wealth of resources to foster this innovation around.
The Open Banking Initiative has begun the industry-wide open standards work required to make this capability scalable and of course, truly open, such as publishing the first versions of the payment initiation specs and Open Data specifications.
These standards enable banks to adopt more flexible API-based methods of systems integration, highlighted by the perfect example of the point of this article, a trend being pioneered by local Scottish banks.
In this documentary experts including Kevin Hanley of the RBS explain how they’ve shifted from ‘point to point’ integrations between business systems, to APIs because these are more efficient and critically, enable the open ecosystems that stimulate creative innovations that power new products that customers value.