May 29, 2020

Angus Sim talks to Imran Gulamhuseinwala about the current state of play for Open Banking in the UK, the implications of the Coronavirus crisis on the sector and what the future holds, as the crisis accelerates a move towards digitalisation that was already underway.

Imran is the Implementation Trustee for Open Banking Ltd. He was appointed by the Competition and Markets Authority in April 2017. As Implementation Trustee he is responsible for leading the Open Banking Implementation Entity (“OB”) and ensuring the UK’s nine largest banks implement a standard Open Banking API to meet their obligations under PSD2 and the CMA’s retail banking Order.

Imran described how the UK decided to take a coordinated approach to Open Banking by establishing a centralised body – The Open Banking Implementation Entity – to oversee the process. Open Banking is predicated around a single, secure API that is open and available to everyone to implement and design, in line with PDS2.

As Imran explains, the Open Banking eco-system has proven itself to be robust in the face of the coronavirus crisis, which is, he says, “very encouraging.” This, to some extent, is due to the OB eco-system being populated by tech-savvy firms, including Fintechs who tend to be naturally good at working virtually. The crisis has shown the need for the Banking sector to be able to innovate and respond at a time when the pace of change continues to accelerate.

Open Banking is a product of an increasingly digitised economy and society, and plays a key role in enhancing digital services. “Trust in the identity and integrity of the parties involved is critical to building confidence in new services,” Imran explains, adding, “Digital ID is a key component of that.” OB has already gone to great lengths to secure the digital ID of the participants, he says, and is now focussing on digital ID of the individuals. No data is held on the individual beyond tokenised attributes. “Where Banks can share these attributes you’ve got the beginnings of a digital ID network,” he adds.

As Imran explains, OB is moving on from the first phase where it established the initial robust regulatory API framework. The focus is now on how to help participants build premium APIs on top – which could include digital identity capabilities. Premium APIs enable Banks to think about how they can take advantage of the emerging “API economy” in order to generate future new revenue streams from innovative new services to their customers. Imran feels that it is in the Regulator’s interests to allow premium APIs to be created and promoted by Banks, not least because it will incentivise Banks to improve the quality of the regulatory APIs that sit underneath them.

The UK, Imran says, is in effect following the Nordic model where data sharing is a perfectly accepted mechanism across many aspects of life, allowing a centralised authentication model. “In the UK we’re potentially taking that model and federating it, so authentication can happen across the entire Banking network.” he explains.

A key aspiration is whether we can leverage technology and data to reduce compliance and onboarding costs whilst at the same time increasing security and improving customer service and experience. Imran completely agrees with this aspiration: “For example, OB improved things dramatically by getting onto mobile – that meant biometrics were then available, which are typically more convenient and secure.”

Imran also believes there are many more elements of functionality possible within the scope of OB that could use ‘direct to bank’ APIs at the point of payment to minimise frauds happening ‘live’. “We need to move quickly, as the fraudsters do, but I believe soon there could be a whole new set of tools available using OB principles and APIs to help combat fraud.”

Imran is fully supportive of the idea that Banks and the wider ecosystem need to be more willing to share more data and analytics to help fight fraud. “Everything in 5MLD points at it – it’s absolutely the right way to do it and there’s no real pushback from the industry either.”There are many areas it can help, not least accelerating suspicious transaction reporting. Imran would like to see a more standardised approach – so that when data is put together from different sources, it more readily fits together in a way that enables rapid analysis.

On the subject of servicing vulnerable groups, Imran reflects that although realistically OB can only really service those that adopt online banking, the global lockdown has caused a huge surge in take-up, as people are forced to find alternatives to traditional face-to-face branch experiences. In doing so many will have found the digital experience much easier and more convenient than expected. This, combined with the amazing propositions being seen from within the OB community to help with a range of issues such as mental health, worries about being scammed, financial exclusion and others, is, he says, a cause for optimism. “The OB eco-system enables a range of innovations such as bringing in the help of a trusted person or loved one to support and watch out for an individual who is facing a problem or threat that they are unable to deal with on their own.” This crisis is accelerating digitisation trends and, as a result, Imran sees the need to reimagine large swathes of the economy if we’re to successfully adapt to becoming a digital society. “OB has an important part to play in this, perhaps towards creating a more digital economy: virtual economy, more resilient economy. OB is a key enabler offering considerable upside to the whole economy. We all need some good news in the coming months and years. Some of that will come from the dreamers, the innovators and the disrupters. The very same that initiatives such as OB are designed to support.”

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