Steve Everett isn’t sure where Open Banking is going. It’s worth noting that Everett is Lloyds’ global head of product and propositions for transaction banking.
This isn’t to say he’s clueless -- far from it. As far as Open Banking is concerned, he’s at the tip of the spear. It’s just that Open Banking has been designed in a deliberately open-ended way, he told AccountingWEB. “You might be concerned that I, as a product head, don’t know the answer, but we’re in a start of a new world and market forces will dictate what clients have an interest in.”
This open-ended nature isn’t a bad thing, he said. In fact, it augurs well. “This really is about innovation. In the span of a week I’ll discuss about four or five different ideas -- whether it’s data-led, payments-led, financing -- for different client segments. For a product developer, it’s the perfect time.”
Everett’s optimism is a bullish counterweight to the extant concerns that Open Banking is a damp squib. Teller’s Stevie Graham has been a particularly vocal critic of the initiative. The banking sector in the UK is, and will remain, an oligopoly, Graham said, and ultimately banks have no commercial interest in allowing third parties to eat into their business.
But there are no dark ulterior motives, according to Everett. Yes, Lloyds is developing its own products and will look to maximise its own commercial interest, but there’s a real interest in making the initiative work. If that means partnering with third-party providers like fintechs, then so be it.
“I’m not ruling anything out. It’s so broad, but that’s the beauty of it. If a fintech comes in tomorrow and says ‘We’ve got this widget and it does this, and we like it and we could integrate it into our infrastructure, why wouldn’t we do it rather than build it ourselves?”
Roll forward 12 months
What Open Banking won’t be, however, is a sudden explosion of innovation. What critics of Open Banking see as a deliberate inertia, Everett views as a natural acclimation to a new reality. “If you looked at the press coverage that weekend and the week before, you would’ve thought you would come in on the Monday morning and the world was going to look completely different.”
But if not now, then when? “If we roll forward 12 months, as well as payment solutions you’ll start seeing some exciting, new SME working capital propositions come to the market,” Everett said. Not just because third parties will be able to collect data from Lloyds, but also because Lloyds can now access third-party data, too.
“Historically, all accounting information has sat in the accounting package and the banks can’t see it. Similarly, all the banking information is with the bank and the accounting providers can’t see it. And then companies like Experian have credit data. If you have APIs that join those three up, you can make a credit decision in seconds.”
The future of Open Banking, as Everett sees it, is propositions not products. Underlying products won’t change. “A payment is still a payment, a loan is still a loan,” Everett said. “I’m not sure you’ll see a lot of new products created.
“What you’ll see is new propositions created that will use those products and position them in a different place within the market. That’s the challenge: how do build new propositions and how do we understand what our clients want?”
About Francois Badenhorst
I'm AccountingWEB's business editor. Feel free to get in touch with comments, tips, scoops or irreverent banter.