Welcome to the third interview of the Open Banking: Behind the Vault series where we are joined by experts in the world of Fintech to take stock of Open Banking so far and to engage in a bit of future-gazing. 

This time we speak with Will Curley, previously Director of Transactional Banking, Payments and International Banking Partners at Tesco Bank, currently running his own payments consultancy DIP Advisory.

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With a background in banking and consumer finance, in particular, Will has been at the forefront of Open Banking and payments globally, starting off in Canada before moving to Europe in 2008.

After leaving Tesco Bank in October 2019, his consultancy work led him to briefly travel all over the world (and then to continue on Zoom as Covid-19 hit) to speak with payment leaders and find out what they’re currently thinking about, and what the future holds.

“I wouldn’t say it is a revolution, but it is a very fast-moving evolution that is happening right now”. 

OPEN BANKING AND DATA-DRIVEN CX: OPPORTUNITIES AND CHALLENGES

In his previous role at Tesco Bank Will was looking after current accounts, credit cards, and international banking partners, as well as the enterprise payments system.

The rollout of Open Banking was a key moment for steering not only changes around regulatory compliance and additional security for customers, but also thinking more broadly about the opportunities that Open Banking data afford when it comes to the payment experience.

“We had a focus on trying to understand how we take our product and make it easier for customers to make payments, and at the same time give them additional information that might help them with their payment and spending journey.”

While Open Banking presents opportunities for financial services companies to provide better, more personalised experiences, products and services to the end-user, Will doesn’t believe Open Banking means much in and of itself. It’s just one pillar of regulation currently shaping how banks, payment providers, and startups use data, and also how customers both access and consider their own data. 

Regulatory considerations and implementations are paramount, in particular when it comes to dealing with personal financial data. And as the opportunities to create new products and services using this data are what’s driving much of the investment into the sector (startups, banks and payment providers), the regulators have a very complex task at hand. 

ARE CONSUMERS BENEFITING ENOUGH FROM THE DATA THAT IS COLLECTED? 

The big question both consumers and regulators need to ask themselves is: Are consumers benefiting enough in some of the ways that their data is collected? 

Will elaborates, “Are we building something that actually allows the consumer to participate actively in how their data is used and what the benefit of that data to the consumer is? I think trying to foster a different partnership between consumer and data collectors is key.” 

The future winners of Open Banking in this context will be companies who consider how much control the consumer has in data sharing; the ones who are building systems that allow for active participation from consumers in how their data is being used. 

In addition, interoperability of data–the ability for systems and organisations to work seamlessly together around common data standards–will be key to make this work. 

“In reality, there’s so much data out there about an individual, and the ability to port that data in a standard format is very difficult. GDPR was a step in the right direction but much more regulation will come into play before we can call out the winners”. 

Rather than seeing GDPR as a box-ticking exercise, it can be a brilliant opportunity, because it introduces a moment where users are pausing and actively consenting to placing their data in systems, even if only to dismiss notifications. 

“The players that start to understand that merely achieving regulatory compliance around data versus actually turning the business model into how you as a data owner, or controller, benefit from data will be successful.” 

Companies who consider what a fair exchange of data looks like, partner to create a system of data interoperability, and allow for active data participation, will start to lead the way in achieving more trust than exists today. 

STRONGER TOGETHER 

As a member of the Open Banking Executive in the UK, Will has been involved with the development of the regulatory framework now in play.

Set up by the UK’s Competition and Markets Authority, the group was launched to create new industry and software standards to drive competition and innovation in UK retail banking—a pretty big task for a broad community of stakeholders, all looking at the system from very different angles. 

“It was quite interesting to see the challenges of bringing many partners together to build what is a much more transparent system than had previously existed. This also included additional partners whether they were TPPs, semi-regulators and consumer groups. So we really looked at things broadly versus just building something that would necessarily be compliant with GDPR and PSD2”.

With the unique perspective of having been involved in the initial consultation phase prior to rollout, as well as being responsible for the implementation in a big bank, Will believes it’s too early to call out any winners in the Open Banking race. 

There’s still more regulation to come into effect, and a lot more expansion to come off the back before we can see players really jumping ahead, but it’s not all doom and gloom. 

The early stages of Open Banking have seen some players successfully moving into niche markets that probably weren’t being efficiently managed by banks in the past. A lot of this has been centred around business, a traditionally underserved and inefficient space in comparison to the consumer marketplace.

According to Will, this is the biggest threat Open Banking has so far posed to incumbent banks.

Ultimately, banks still control 90% of consumer spending and have a level of trust and comfort that keeps consumers coming back to the banking side.

“We haven’t seen any neobanks make any huge inroads in terms of taking customers away from the big banks, but Open Banking will be another avenue to influence within the banking space. Does this mean banks will play a slightly different role than they do today? Does it mean that banking will become even more fractured? I am still a bit undetermined on this”.

WHAT THE FUTURE HOLDS 

In time, Will is hopeful that Open Banking as a data and consent-driven opportunity will help create the efficiencies, clarities, and simplifications that consumers are looking for, in particular when it comes to payments.

Today we are still relatively passive in how we manage assets like pensions, mortgages, long-term savings and our daily budgets. In the near future, the hope would be that passive management will become smarter; not needing active involvement from consumers, but still leaving them with informed control of keystone decisions. 

“I think the greater utilisation of data and machine learning will help consumers to avoid stupid fees and charges and help them to manage their money better”.

Will predicts that it is data coupled with automation through advances in AI and machine learning that will make it “worth it” for consumers to give permission, and keep on consenting to data sharing in the longer term. 

“As AI and permissions change we will see a change. For example, if I gave permission to an entity to change my cable bill as when it was a better idea and it saved me time and money, I would do that all day long. It's things like that where you can start to see, okay, I could actually save money on product-based ideas. The more information that somebody gives out, the more comfortable they feel about owning their own data.” 

Competitive players will know that they need to pass the ball when asked (to get the ball back!), provide trustworthy support and advice at key moments in decision-making, and the rest of the time prove commitment to working in the background to get rid of inefficiencies, stretch income and co-create wealth.

Will elaborates, “To have financial holdings consolidated somewhere where you as a consumer could get a neutral position on what decisions you should make is where we should be heading.”

It’s trying to find that neutrality of answer, without the bias of an individual business’ interest (e.g. recommending only your own products and services, when there’s a better deal elsewhere) that will be the big challenge. 

“Ultimately, if you have control of your own data and can share it with the people you want to, so it has interoperability, then I think data can reside in places that are neutral to developing the best answer.” 

“That will be something that AI, I believe, will ultimately allow us to enter into.”

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