There’s a fairly good chance that, before reading this, you’ll have logged into your banking app this morning to check your balance. Or your savings account, your outstanding mortgage, your ISA, pension or even the price of Bitcoin.
As a nation, we’re pretty good at finance. The UK is one of the very few truly global financial centres, with exceptional talent, deep pools of capital, the English language, and a trusted legal system with well-regarded financial regulators too.
Over the past decade, that’s turned into a winning recipe for financial technology, or fintech as it’s known for short. More and more of us are using firms like Starling, PensionBee or Nutmeg to manage our finances and even the less well-known names (for the moment at least) including Snoop, Yapily or Bud.
One of the biggest success stories to date has been our approach to open banking. You may not have heard of it, but there’s a good possibility that you may have used it without realising, or you will soon.
It’s a system that allows you or me to securely share our banking details so we can apply for a mortgage without tonnes of paperwork, or so a small business can manage its cashflow and automate invoices to customers quickly and with far less fuss. You can even pay your tax bill using open banking. More than three million of us are using it already, and it’s adding around a million more users every six months.
But this hasn’t happened all by luck. The UK has designed and installed a system that’s given birth to a hugely exciting and innovative industry which is challenging the banking giants. We already have more than double the number of fintechs offering open banking services than the entire EU, with countries like Australia and Singapore queuing up to follow our lead.
Better still is the potential to extend open banking to cover other services too: why stop at High Street banking when you or I could use the same approach to get better deals on our savings or insurance? Or on our energy bills, broadband and TV, or even our weekly online grocery shop too?
And yet this express train of exciting innovation and entrepreneurial energy could be about to come off its rails. Open banking’s mandate is due to run out later this year, and the Competition and Markets Authority (CMA) is about to decide on its future.
In one corner, we have the banks who are keen to take control of this upstart that has spawned no end of new challenger firms, and threatens to eat their lunch unless they can throttle or hobble it soon. In the other corner, the entrepreneurs who will keep innovating and developing new ideas that customers can decide if they like or not, before the big banks try to do it for them.
We may have been first to introduce open banking, but if we don’t keep going then progress will stall and, in an industry as fast-paced and creative as finance, that means our lead will be gone.
Now isn’t the time to slow down or, worse still, to stop altogether: it’s the moment to think big instead. Instead of slowing or throttling open banking so other countries can overtake us, we should be extending it for another three or four years, and telling them to roll out what they’ve done to create open everything, covering lots of the rest of our economy as well.
Let’s make sure the winner of this decision is competition and innovation. Because that means consumers will win too.