# Open banking is coming and here is why customers should be excited Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2017-12-05 Category: BANKING Category URL: https://financedigest.com/category/banking Meta Title: Open Banking and PSD2: The Future of Financial Services in Meta Description: Learn how Open Banking and PSD2 are set to revolutionise the financial industry in the UK, providing consumers with greater control and choice. URL: https://financedigest.com/open-banking-is-coming-and-here-is-why-customers-should-be-excitedhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/fd051217-1-1736843184308-compressed.jpg) _By **James Varga**, CEO, The ID Co_ ![James Varga](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/fd051217-1-1-200x300-1736843184214-compressed.jpg) James Varga The introduction of Open Banking and the Second Payment Service Directive (PSD2)stands to light a rocket under the financial services industry next year. From January, banks will have to open their API’s up so that merchants and vendors can access their client’s account data. And it’s about time. This change is coming about because of the historic lack of competition among the main [retail banks](https://www.financedigest.com/insight-into-tomorrows-retail-banking-customers.html "INSIGHT INTO TOMORROW’S RETAIL BANKING CUSTOMERS"), putting customers off the concept of ‘banking’ and exploring their financial services options. Now, a much-needed intervention by the [Competition and Markets](https://www.financedigest.com/paper-recycling-market-competitive-growth-strategies-based-on-type-applications-end-user-and-region.html "Paper Recycling Market Competitive Growth Strategies Based on Type, Applications, End User and Region") Authority (CMA) means that Open Banking is coming to the UK and soon. Banks have until January 2018 to ensure they are compliant with [Open](https://www.financedigest.com/what-does-2022-hold-for-open-banking-some-predictions-from-the-ecosystem.html "What does 2022 hold for open banking? Some predictions from the ecosystem") Banking Requirements’ By allowing [consumers to move freely between the financial products](https://www.financedigest.com/bagasse-tableware-products-market-will-top-us-3-75-bn-by-2031-as-consumers-proclivity-for-eco-friendly-and-single-use-product-purchase-grows.html "Bagasse Tableware Products Market will top US$ 3.75 Bn by 2031 as Consumers’ Proclivity for Eco-Friendly and Single-Use Product Purchase Grows"), a new breed of consumer choice will become available which is not possible under the current structure. PSD2 will make banks more [competitive while giving](https://www.financedigest.com/how-automation-gives-fs-leaders-a-competitive-advantage.html "How automation gives FS leaders a competitive advantage") a host of other organisations, such as retail merchants, a platform through which to service customers. Yet, as the [journey toward the implementation of PSD2 nears](https://www.financedigest.com/the-road-to-transformation-raconteur-ceos-journey-from-near-bust-to-boom.html "The Road To Transformation: Raconteur CEO’s journey from near bust to boom") its end, there is concern that customers are being left in the dark about what it all means for them, day to day.According to the Consumers’ Association Which, for example, 92% of people in the UK have not heard of [Open Banking](https://www.financedigest.com/why-open-banking-heralds-a-new-era-of-ecommerce-merchant-and-bank-collaboration.html "Why Open Banking Heralds a New Era of eCommerce Merchant and Bank Collaboration"). The financial technology industry needs to be clear about how [Open Banking stands to benefit customers](https://www.financedigest.com/strong-customer-authentication-must-be-adopted-to-make-open-banking-a-success.html "Strong Customer Authentication must be adopted to make open banking a Success") and why positive change is on the way. **Protection, control, confidence** Open [Banking means consumers and retailers have an effective](https://www.financedigest.com/how-effective-talent-management-could-disrupt-the-retail-banking-sector.html "HOW EFFECTIVE TALENT MANAGEMENT COULD DISRUPT THE RETAIL BANKING SECTOR"), convenient and secure payment method within the EU. [Personal financial management](https://www.financedigest.com/personalized-digitization-to-drive-the-scoliosis-management-market.html "Personalized digitization to drive the Scoliosis Management Market") tools will bring all your accounts together into a single intelligent environment. From your mortgage to your current account and your credit card, this new environment will make money management easier and more secure, giving [customers a far greater degree of power](https://www.financedigest.com/ai-will-power-95-of-customer-interactions-by-2025.html "AI will power 95% of customer interactions by 2025") to manage their personal financial data. Control of your data and where it is used is a core component of cybersecurity and identity. The ability for consumers to have complete visibility within their online banking platform of how and by who their bank data is being used and which third parties have access to the data will increase [consumer confidence](https://www.financedigest.com/asian-shares-rise-after-consumer-confidence-boosts-nasdaq-to-record-high.html "Asian shares rise after consumer confidence boosts Nasdaq to record high"). This enhanced visibility increases [security and reduces the chance of fraud given that the consumer](https://www.financedigest.com/as-consumer-spending-increases-convenience-and-security-have-never-been-more-important.html "As consumer spending increases, convenience and security have never been more important") will be fully aware of where their data is being used. **Competition means innovation** Within the banks themselves, we can expect a new wave of innovation in the form of new [current account](https://www.financedigest.com/coffee-current-accounts-and-the-commoditisation-conundrum.html "Coffee, current accounts and the commoditisation conundrum") offerings and increased competition in favour of the consumer. Whilst efforts have been made over the last ten years to allow [consumers to switch current accounts](https://www.financedigest.com/what-successful-accounting-looks-like-in-the-age-of-the-consumer.html "What successful accounting looks like in the age of the consumer") within seven days, a relatively small amount of people in the UK do so. There is a lingering perception that the process will be arduous and longwinded and that there’s no real difference between what one bank offers from the next, a perception that the [banking industry](https://www.financedigest.com/how-is-green-finance-reshaping-the-banking-industry.html "How is green finance reshaping the banking industry?") is now going to have to work hard to address. Beyond the banks themselves, a range of new services for customers will be [created by start-ups](https://www.financedigest.com/five-critical-tips-to-create-a-successful-start-up.html "Five Critical Tips To Create A Successful Start-up") and existing businesses, fuelled by this new source of rich data.For example, services such as comparison websites or apps could [suggest and facilitate change by analysing your existing](https://www.financedigest.com/chinese-findings-on-mars-suggest-water-existed-for-longer-on-planets-surface.html "Chinese findings on Mars suggest water existed for longer on planet’s surface") live financial data and seamlessly finding you a better option. The service would scan all your outgoings and [move you to cheaper suppliers without you having to know and enter all your data](https://www.financedigest.com/dollar-moves-off-lows-on-heels-of-inflation-data.html "Dollar moves off lows on heels of inflation data") manually. As active contributors of the [Open Bank](https://www.financedigest.com/open-finance-and-smart-ecosystems-wont-wait-for-banks.html "Open Finance and Smart Ecosystems Won’t Wait for Banks") Working Group, The ID Co. welcomes these changes. They are a chance to better serve the [market and to empower consumers](https://www.financedigest.com/welding-consumables-market-continue-to-be-largest-product-segment-in-consumer-market.html "Welding Consumables Market Continue to be Largest Product Segment in Consumer Market"), giving them more control of their personal financial data and will improve consumer confidence. Innovation will be encouraged and the public’s perception of the financial [sector](https://www.financedigest.com/time-to-act-as-cybercriminals-hot-on-the-heels-of-finance-sector.html "Time to act as cybercriminals hot on the heels of finance sector"), which has never really recovered from 2008, will improve. Most importantly, customers will be put [back in the driving seat](https://www.financedigest.com/decision-to-end-ecb-reinvestments-takes-back-seat-to-rate-hikes-sources-say.html "Decision to end ECB reinvestments takes back seat to rate hikes, sources say"). --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---