It is too early to assess Open Banking’s full impact but the foundations appear to have been established successfully, in particular the data sharing APIs and the security framework. There have been significant improvements to the process that enables customers to authorise a new third party app, and initial evidence suggests this could increase the rate of completed signups by over 50%.
Many other countries, including Australia, are now using the UK approach and standards as a blueprint for their own Open Banking projects. In the UK, a similar model is already being considered more broadly for financial services, as well as for energy, telecoms and digital markets.
While Open Banking was established by CMA order, it also has to fit within the EU’s Second Payment Services Directive (PSD2). In our view, the shortcomings of PSD2 are likely to hold back the development of key features and subsequently the adoption of Open Banking in the UK, and there are further gaps emerging as well.