The wider financial services community should embrace innovations already made in Open Banking to shape future developments in lending, investments, pensions and financial planning.
A panel of experts speaking at the London Open Banking Expo, explained that the sharing of information between financial services providers was infrequent outside of the banking industry and debated whether regulatory compulsion was necessary to encourage providers to do so.
The panel agreed that open finance could have huge benefits to consumers, ranging from those with limited access to loans, all the way through to the wealthiest in society.
Addressing delegates, David Joyce, chief executive officer, UK at Crealogix, said it was time to move the conversation on from Open Banking and, instead, talk about Open Finance.
He said: “If I look at what is happening in the UK, so far, adoption has been driven by retail banking and the regulator, but if I look at the opportunities that exist, the opportunities are a much broader church.
“We work a lot with the asset management and wealth management industry. There is a huge opportunity for Open Finance. If Open Banking is, to misquote 11FS in an earlier session, 1% done, then Open Finance is 0.1% done.”
Mr Joyce said that expanding the Open Finance ecosystem would directly improve consumer interest in innovation and broaden the appeal of Open Banking.
He added: “That is where we will start to engage with consumers and different demographics. For those who want to take control of their financial data, for their pensions, their savings, or their investments, the framework that Open Banking has provided now needs to extend into those other sectors.”
Mr Joyce’s assessment of the market was endorsed by consumer banking champion Faith Reynolds, who said recognition the potential of Open Finance was key to accelerating levels of adoption.
“It is really important that we extend from Open Banking into Open Finance,” she said. “Earlier this year, we did some consumer analysis and found that there are around 17% of people on the margins of financial services without access to the full gamut of financial services. It is possible that Open Finance could help them.”
Ms Reynolds added that the opportunity set goes beyond the ‘under banked’ however, saying that mainstream customers could also be better served if the industry worked to expand the Open Finance ecosystem.
She said: “The CMA order was very clear that overdrafts are an expensive form of credit and we need to see alternatives to coming into the market. These might not look like overdrafts but for those product comparisons to be truly made, we need open data on other product sets as well.”