Five major banks given deadline extension for open banking
Five of the nine major banks ordered by the Competition and Markets Authority (CMA) to get ready for open banking have been handed a deadline extension.
Barclays, Royal Bank of Scotland, HSBC, Santander and Bank of Ireland informed the CMA they could not release all the data needed in the timeframe required by the Second Payment Services Directive (PSD2).
Fundamentally, PSD2 legislation changes the ownership of financial data from the bank to the consumer. So in theory, in a post-PSD2 world, a business can share its financial and banking data with third parties to get better deals on financial services like loans.
The CMA had ordered the nine major banks to comply by January 13. But the authority has now given a maximum of six extra weeks preparation time to Barclays, Bank of Ireland, RBS and HSBC. Cater Allen, a Santander owned private bank with 40,000 active business current accounts, will miss the deadline by a year as it needs to rebuild its IT system.
The Open Banking Implementation Entity (the ‘OBIE’), the body created by the UK’s nine largest personal and small business providers to manage the PSD2 rollout, avoided calling it a delay. Instead, Imran Gulamhuseinwala, trustee of the OBIE, characterised it as “managed” implementation.
In a statement, Gulamhuseinwala explained, that the fintech businesses offering Open Banking services will be asked to “limit the number of instructions processed and only make it available to a small group of selected customers”.
“While Open Banking will launch on the date specified by the CMA, some institutions will need more time in order to complete preparations for making Open Banking available to all of their personal and small business current account customers.”
When asked for comment, a CMA spokesperson said: “Where banks are expected to miss the deadline for some of their customers, we are taking action to ensure that people do not lose out and can enjoy the benefits of Open Banking as quickly as possible.”
Perhaps unsurprisingly, the reaction from the fintech community has been less muted. On Twitter, Teller’s CEO and founder Stevie Graham went as far as to suggest “people should go to prison for this”.
Iwoca’s CEO Christoph Rieche was more measured, but told AccountingWEB he was disappointed by the delay. “It’s underwhelming to see the banks not get the act together despite the CMA being very clear on what the deadlines are.”
Rieche wasn’t crestfallen about the delay, however. He remains “optimistic” but admitted the delay will involve some course correction from Iwoca. “It’s about the momentum that we as an industry want to create. To go out and say, open banking is here and it can give you these major benefits.
“It’s not the end of the world, the revolution is still happening -- but it’s just not happening with a big bang.”