The greatest story never told

I was excited about open banking back in the day.

The world is connected, and real-time and open banking is absolutely needed

I was one of those people. I sort of still am.

When the regulation was still coming down the pipe, when it was a thing we needed to prepare for rather than a reality we all take for granted, I did presentations with clever little icons for my boss to understand the art of the possible. We brainstormed with clients on the opportunity. Beyond account aggregation, I mean. Seriously with the account aggregation.

I was excited.

And my excitement remained real and strong even after sensible voices said, “Don’t expect a stampede.”

John told me that.

He was right, as it turns out.

There was no stampede.

What is the opposite of a stampede? A few folks cautiously strolling in your direction hesitantly, slowly and in very small numbers?

If that has a name, then that is what happened.

It was not nothing. It was just not what I had hoped for.

In a recent column piece, I spoke about that fact. OK. Lamented is a more accurate word, probably. But the point remains: this could have been a great thing.

This is still a great thing. Potentially.

But it is not a great thing commercially.

Not yet anyway.

A lot of things don’t quite benefit from being ‘open’. Don’t need it or we haven’t imagined it yet.

A lot of effort is needed for benefits that are loosely understood by the consumers and therefore not pursued. And as for the business side of things, the ideas are as thin on the ground as the revenue.

We are not done yet, say the proponents of this space. We are doing a lot of great work, they say. And it’s all absolutely true.

But we also know that a few months back, Australia, a pioneer in open banking, didn’t quite throw in the towel, but they definitely called it and went back to the drawing board.

You know the facts, but just in case, Australia’s Consumer Data Right regime went live in 2020.

Work to comply started a few years before that date of course, and the cost of investment into being compliant is calculated to be approximately 1.5 billion Aussie dollars on the bank side, and God knows what the government has spent on top of that. And a few months ago, we read a review revealing that in 2023 only 0.31% of bank customers were using CDR and more than half of all data sharing arrangements had been stopped or allowed to lapse.

Why?

Because the commercials didn’t stack up, especially for smaller banks who were carrying disproportionately high compliance costs.

But also some fraud concerns emerged as budgets were being balanced (in the spirit of ‘what will happen if I don’t spend that and don’t do this’) and above all else, the initiative was plagued by the same problem seen in the UK and elsewhere. Consumers who enthusiastically take up mobile wallets and Apple or Google Pay don’t use it. Maybe because they don’t know how. Mostly because they don’t see why.

The bridge between the art of the possible and the actually possible needs to be built by someone who knows how to build bridges for people to actually cross it.

Are we going to see regulators going back to the drawing board?

The Australian narrative seems to suggest so. Other countries haven’t communicated their numbers with as much openness, but reports point to a similar situation.

I suspect it is inevitable that a bit of a rethink will have to happen.

And when it does… do you think those doing the thinking will accept requests?

Because I have two and I will leave them right here just in case. You never know, do you?

The first one is a little bit of a high-level thought. And it’s just that… the consumer shouldn’t have to drive this kind of thing. Just saying. If you do it for the consumer, then you need to assemble it and write the user manual and make sure that the people who will offer it are appropriately incentivised (carrot or stick, it’s up to you Mr Regulator, but a combo tends to work best, I find) or you know… this happens. The thing that already happened.

The second one is a little bit on the geekier side, but if you do go back to the drawing board… can you maybe do it together?

So that the details of the provisions, standards and protocols reflect a world where ‘open’ doesn’t stop at each of our borders and systems don’t need to be rebuilt at worst or reconfigured at best to comply with the principles of ‘openness’ in each country?

I am not saying for a moment that this is the reason why we didn’t have a stampede. I am just saying… if we are doing a rethink, might as well think through that too, alongside everything else.

So when this story finally gets told, it’s robust, real and truly open.

We will need it.

The world is connected, and real-time and open banking is absolutely needed. Robust, standardised, truly and safely open… oh and commercially viable.

Maybe the use cases that will supercharge this are exactly in the places that are missing now.

Maybe it all just needs time.

But if we are going to rethink, let’s learn, is all I’m saying.

#LedaWrites

Leda Glyptis is FinTech Futures’ resident thought provocateur – she leads, writes on, lives and breathes transformation and digital disruption.

She is a recovering banker, lapsed academic and long-term resident of the banking ecosystem. 

Leda is also a published author – her first book, Bankers Like Us: Dispatches from an Industry in Transition, is available to order here.

All opinions are her own. You can’t have them – but you are welcome to debate and comment!

Follow Leda on X @LedaGlyptis and LinkedIn.