Six years ago, the UK achieved a pioneering milestone by becoming the world's first country to embrace open banking, exploiting the value of consumer and business data. This initiative was aimed at promoting greater competition in the financial services sector and bringing in a wider range of innovative products and services, from digital banks to specialist services catering to specific needs.
While there have been some great innovations in banking and finance as a result of open banking, the reality is that progress has not been made as fast as some initially expected.

In the beginning, open banking suffered from the classic chicken and egg problem to some extent. Adoption by consumers will only take place as confidence in it grows, fuelled in part by it being available in more areas of their financial lives. At the same time, industry adoption has been held back by a lack of consumer engagement and low conversion rates.

Challenges And Opportunities: How Open Banking Is Revolutionising Financial Services

Today, this challenge has mostly been overcome. CRIF’s recent 2023 edition of its Banking on Banks report found that around three in ten (28%) people in the UK would now be willing to share more of their data with financial providers if it helped them overcome challenges such as applying for credit or keeping track of their spending. Nevertheless, only 4% of those we surveyed said their bank had proactively engaged with them to offer products or services that met their needs.

Celebrating the 6th anniversary of open banking in the UK, this article reflects on the transformative journey since its launch in January 2018, and how innovative banks, lenders and organisations are now actively looking at ways to incorporate its benefits into their services in more integrated ways.

As a mechanism set to revolutionise finance management, open banking has enabled major European and UK account providers to securely access services from a wide range of companies by promoting innovation, transparency and competition via secure APIs.
In fact, the resulting open finance has led to the development of new services encompassing mortgages, savings, pensions, insurance and consumer credit.

In January 2023, the CMA announced the successful completion of the open banking implementation roadmap and the establishment of the Joint Regulatory Oversight Committee (JROC). Under the leadership of the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR), the JROC outlined some priorities, including the establishment of a sustainable open banking ecosystem, the development of the open banking payment sector, and the adoption of a scalable model for future data sharing propositions.

The banking and fintech industries have been positive about open banking’s progress over recent years. The PSR has highlighted that over 7 million people and businesses currently benefit from open banking, enjoying innovative services that save time, money and make it easier to access financial products and services.

Changes In The Regulatory Landscape

Looking ahead, regulatory changes such as PSD3 are expected to further boost open banking innovation and competition, highlighting the need for a sustainable remuneration framework amid changes brought about by PSD3.
But as well as banks, fintech companies and financial institutions, insurers can also benefit from open banking.

Specifically, open banking enables insurers to offer more tailored products and services that meet customer needs as well as streamline claims processing. It also simplifies the application and onboarding process, saving time when taking out cover, increasing customer satisfaction and ultimately enhancing customer loyalty.

Sara Costantini, Regional Director for the UK & Ireland at CRIF said: “Our mission is to bring the benefits of open banking to more consumers, businesses, insurance companies and financial institutions through our diverse range of bespoke digital products and solutions. Those who embrace these innovations can stay ahead of the curve and offer a better service to customers than their competitors. Our open banking solutions empower organisations to harness new data sources and deliver a seamless customer experience, and we do this without compromising on security, compliance or the ability to collect, manage or process customer data.”

Seize the Future: CRIF’s Open Banking Paves the Way to Innovation

Using a data-driven approach and harnessing the power of open banking, financial institutions and businesses can build lasting and meaningful relationships with their customers.
Financial institutions can address one specific need or leverage the full potential of the CRIF Open Banking Suite, with a flexible approach.

Thanks to a combination of data and insights, the CRIF Open Banking Solution can successfully help with specific use cases:

  • Categorisation
  • Credit Risk
  • Identity Verification
  • Cash Flow
  • Affordability Check
  • Marketing Insights

In addition, CRIF provides organisations with advanced machine learning and artificial intelligence solutions to optimise targeted profiling, KYC/KYB validations, risk management and loss mitigation techniques.

CRIF has always been committed to leading innovation, promoting financial inclusion and supporting the evolution of the financial industry.

Together to the next level!