Banking opens up control

It’s been over a week since the second European-wide Payment Services Directive (PSD2) came into place, facilitating an Open Banking system for retail banks operating within the EU.

Essentially this means that the UK’s nine biggest banks can now make customers’ financial data accessible for other banks and accredited third parties when given consent. By allowing customers to analyse and review their options the hope is that this might encourage switching and increase competition between providers, to combat stagnation.

Many see this having the potential to create revolutionary change in the way we use financial services, while stimulating new products and challengers within the market. Although with this increased customer control comes new risks, and several are also preoccupied with the liability challenges associated with opening private data up to non-bank third party organisations.

We’re excited to see the impact these new rules might have on emerging fintech firms, although the full effects won’t be felt until all remaining banks are ready to begin sharing their data. Lloyds was the only high street bank prepared for the deadline, while others including Barclays, HSBC, RBS and Nationwide have been granted a postponement until later in the year.