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Towards Open Banking and Better Control Over Your Personal Data

James Varga


Open Banking

James Varga, the CEO of The ID Co. explains the coming changes to the banking system and what it means for businesses and consumers alike.

James Varga, CEO, The ID Co.These are interesting times for the financial services sector. Several significant changes which will affect the way banking customers spend and manage money, the way banks and lenders operate, and the way personal data is stored, secured and shared are just around the corner.

Come January, for example, the second of the EU’s Payment Services Directive (PSD2) will pass into supranational law. This means banks, including those in the UK (despite all things Brexit), will have to open up their API’s to other merchants and retailers so they will have access to their customers’ financial data.

Open Banking standards are introducing a multitude of opportunities for consumers and businesses alike. By allowing consumers to move freely between the financial products Open Banking is creating an evolution in consumer choice not possible under the current system. It is a movement toward a freer, less inhibited approach to money management which hands control back to the customer.


Additionally, Open Banking APIs will serve to drive innovation and growth among new businesses in the financial technology space, as well as between banks themselves. It will inspire an upsurge in competition when it comes to financial products and services. More products will be on offer and the competition between businesses will be fiercer, so in the long run, it will give a much-needed boost to the UK’s financial services sector.

Stiffer competition is of particular note when considering the impact of Open Banking as it was this lack of competition that moved the UK’s Competition and Markets Authority (CMA) to make the move toward Open Banking in the first place.

So how will Open Banking manifest itself? Open Banking APIs will become available from the nine major U.K. banks who have been mandated by the CMA early next year. There will be an interim period during which identity verification and bank validation services like DirectID will continue accessing bank data through current industry standard methods until the Regulatory Technical Standard come into effect in November 2019.

By this time DirectID will, for example, have direct connections to all the UK’s major banks.  Connections to the rest of the banking landscape and the customer data held there will be maintained using screen scraping. Where APIs are not provided, screen scraping can be used to collect display data from one application and translate it so that another application can display it. This is permitted where an API is not available or is not sufficient, ensuring that DirectID maintains an elevated level of service and data quality for its customers.

Related to this are the developments in General Data Protection Regulation (GDPR), essentially an update to existing data protection laws. Although already relevant, GDPR will become even more critical with Opening Banking just around the corner. With a series of new regulations are set to be implemented come May 2018, we at The ID Co have, for example, launched an EU data centre this year in the UK to support our customers who transact with European customers and need to keep their data inside the EU for GDPR compliance.

The new regulations will offer better control of your personal data. The ability for consumers to have complete visibility of how and by who their bank data is being used – and which third parties have access to it – will increase consumer confidence. It is another area that anyone with an interest in Open Banking and financial technology should pay close attention to.

James Varga, CEO, The ID Co.

James Varga

CEO, the ID Co.

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