As the UK gets to grips with the benefits of Open Finance, Open Banking Expo Magazine catches up with Steve Tigar, chief executive officer of Money Dashboard, who is hoping his company will be a huge beneficiary of the forthcoming transition…
On March 17, 2020, the UK’s Financial Conduct Authority closed its consultation on an Open Finance framework. It had sought opinions from consumers, banks, fintechs and businesses across financial services for three months.
Already considered a leader in Open Banking, the industry is now looking to the next stage of the development, the concept of Open Finance.
This world, where the consumer can access all their financial information in one place, including current accounts, pensions, investments, credit cards, finance agreements and mortgages, has been tipped to transform the way Britons live their day to day lives.
With more than 500,000 registered users, Money Dashboard is one step ahead of the curve, offering consumers a financial services one-stop-shop.
“Open Banking attempted to prise open the restrictive grip that banks had on their customers and their data,” explains Mr Tigar.
“Open Banking APIs standardised access for regulated firms. They enable them to provide numerous services to customers from personal financial management to credit management tools, all through seamless secure connections.”
Mr Tigar admits that while some of these innovations have worked, it has taken a strong-arm approach from regulators, in some instances, to make it happen.
“Some of this has worked but it had to be mandated by legislation under the Payment Services Regulations and somewhat under duress by some of the banks.”
A different beast
He believes, though, that Open Finance is a different beast, however, as all regulated firms offering products from mortgages to insurance will be forced to open up access to their client data sets.
“The rationale for this, like Open Banking, is to enable consumers to consolidate their financial records in one secure location.”
Money Dashboard launched in 2010 to help people to take control of their financial life via its personal finance app. It gives consumers the ‘TrueView’ of their financial position by consolidating all their current accounts, credit cards, savings and investment accounts from more than 40 financial institutions, and allocating each bank transaction into a distinct expenditure category, thereby automatically organising an individual’s finances for them.
While the app itself is free for consumers to use, the company generates revenue by creating market research from anonymised bank statement data. Mr Tigar gives various use cases for this data, including allowing hedge funds to predict revenue announcements of listed companies.
In 2019, Money Dashboard completed a funding round, which attracted investment from more than 3,300 investors to the tune of £4.6 million via crowdfunding platform, Crowdcube. The company reached its initial target of £1.5 million in under 45 minutes, making it the largest FinTech raise on Crowdcube in 2019.
Mr Tigar says that the funds are being used to build out the app and triple the company’s Edinburgh-based team from 20 to 60 staff, adding “We are now equipped and ready to help people from every walk of life master their money.”
The FCA’s vision to extend the idea of Open Banking to areas of the market including insurance and mortgages has the potential to transform financial services for consumers.
However, it is clear that it will take a while for other areas of financial services to come on board – not least because each industry has its own regulator and standards to adhere to.
“The challenge faced by the financial services industry is whether Open Finance will be mandated by legislation to set out standards such as APIs, client data portability and liability rules for customer loss,” Mr Tigar explains.
An additional challenge is the ability for some of the more established, or incumbent, financial institutions to keep a pace with the advances in technology required to really embrace an Open Finance framework. Previously, in Open Banking, this is where fintechs and smaller, nimble start-ups were able to gain traction – offering their expertise to the banks without much disruption for the end customers.
“It is clear that some parts of the industry are only just starting the digital revolution let alone build digital gateways for third parties to share their client data,” Mr Tigar concludes.
“For some firms there is little incentive to ‘open’ up to other regulated firms, but others are embracing the opportunity to enhance their clients’ experience by providing a holistic view of their financial wellbeing.”