Brand new standards for creating, using and sharing banking data
What’s it all about? The Data Sharing and Open Data for Banks initiative is sponsored by HM Treasury and has gathered together a group of experts from banks, start-ups and other interested parties, like Worldpay, to try and work out how to develop a new common standard for allowing access to personal bank accounts.
The shared vision is a world with more open data access, where banking data is not tied to customers, and information like Terms and Conditions, ATM locations, or branch addresses are much more easily open to view.
Ultimately these new standards will enable ‘first read’ access where a third party could, only with your permission of course, read data from your bank account. Imagine a new service which gathers data from all your accounts in one central place, and then makes your life easier by doing your accounts for you, or helping you switch money between accounts so you can benefit from a better interest rate. It could also help by providing better information about your credit worthiness when applying for a loan or a mortgage.
But, the last stage is most exciting for the payments industry, as with this the standards become all about allowing third party access to bank accounts, in order to pay other people or companies quickly and easily. With more and more peer to peer payment options popping up and the use of digital wallets gradually starting to overtake traditional plastic cards when shopping online – its clear the banking industry needs to offer greater convenience and flexibility to consumers, especially when it comes to payments.
These changes will be a boon to the already growing European fintech industry, creating new services and products that we cannot yet imagine. For payments this means new ways to pay that may happen instantly. Open APIs will provide a standard way of accessing bank accounts and there will be a central reference implementation (also called sandbox) which will enable those keener developers to get in and start coding APIs quickly.
It’s worth saying here too though, that any new standards developed by the group, will of course have all the proper controls, security and auditing in place, all the while ensuring that consumers maintain full control over their bank accounts.
I am old enough to remember the early internet where things were hard to access; in the walled gardens of AOL; and even CompuServe with Bulletin boards before that. Banking and access to bank account products feels a little like that today, so a standard set of APIs will be a great leveller – providing the infrastructure for finance of the future and enabling the world wide web for both banking and payments.
We’ll have some challenges to overcome along the way, particularly when considering the reversibility of payments: like how you get your money back if you make a mistake, or how to manage those instances where a merchant insists that the goods were delivered, but you never received them. Right now the card payments industry has a well-developed process for handling disputes, with a thick rule book moderated by the card schemes (think Visa/MasterCard/Amex) that both protects your consumer rights and often results in monies paid directly back into your bank account. How we’ll manage these things when there isn’t a plastic card, or associated ‘paper trail’ involved, will be an interesting problem for us to resolve. But it is all solvable.
It’s an exciting time, and great to be part of a forum which is showing the way for easier, super fast, secure payments for consumers. Stay tuned to find more…