In its bid to enhance value to customers, the key measures and directives of CMA usher the revamp of the banking ecosystem in UK towards Open Banking with well laid out timelines. Open APIs have been laid out as one of prominent "Foundation Remedies". In terms of implementation, the CMA will require the release of least sensitive data (bank data on their products, services, prices and T&C's) first by the end of March’2017 with all other aspects of the open banking standard ready for early 2018. The CMA has further directed the industry to work closely and collaboratively with bodies like BACS, FCA and OBWG to usher in the new order.
2017 & 2018 are set to be the transformative years for major banks in the UK to lay the foundation for a robust Open Banking future.
CMA Remedies, a major influence towards Open Banking
Globally, Open Banking is only a question of time and in UK, the CMA push is all about bringing the future much closer. Fueled by new technologies and driven by the need to standardize Open Banking API, the CMA directives will
- Enhance the capability of consumers (individual and SME) to accurately evaluate market offerings
- Facilitate the creation of new digital services
- Pave way for development of new business models offering innovative services to customers
Open Banking - The future is here!
Both market forces and CMA directives have put banks on an aggressive trajectory. Understandably, weighed-down by legacy infrastructure and solutions, many banks will primarily focus on achieving regulatory compliance. However, our view and recommendation for banks is to focus beyond the immediate future, and beyond just compliance.
History shows inertia on the part of incumbents could lead to being rendered irrelevant in a new world defined by challengers. To thrive and succeed will hinge on changing elements that are within the bank’s control to provide the required nimbleness and responsiveness to meet the demands of the new ecosystem.
Banks require a paradigm shift in viewing Open Banking as an opportunity to create more diversified and differentiated value propositions (See Figure 2). This will ensure the bank’s relevancy to its customers and avoid the potential of being obscured by aggressive new competitors.