オープンバンキングEXPO 2024においてROIの向上が最優先課題に

The middle of October is a busy time for any self-respecting industry analyst, as event season is in full swing. The highlight of last week was the Open Banking Expo in London, which brought together senior stakeholders from across the value chain to compare notes on where the industry is today, and what’s coming up next.

As always, the organisers put on a strong agenda. This covered a wide range of topics relating to open banking, ranging from payments to fraud to open finance and smart data, but three themes resonated most strongly.

Delivering an ROI now tops the agenda for banks

The industry has undoubtedly been on a journey when it comes to open banking, but we appear to be entering a new phase of product development. While some of the frustrations over the costs of delivering against the CMA (Competition and Markets Authority) mandate are still very much on show (and it’s easy to understand why), the consistent message coming from banks was that they are squarely focused on delivering returns on the investments made in creating the open banking rails.

This is underpinned by the benefits already being felt across the market. As one senior bank executive commented from the stage “we’re a long way from cost recovery, but we’re feeling the benefits”. These successes are fuelling a deeper emphasis on moving further and faster with other product development opportunities. Crucially, open banking is being viewed as a mechanism to build deeper customer engagement across a range of different product areas and workflows.

To draw out a couple of examples, the opening keynote featured HSBC highlighting its success in improving inbound credit card repayments (a theme Virgin Money also covered in depth at the event), as well as its merchant payment acceptance proposition. Santander also joined in the show-and-tell, sharing its plans to deliver a common set of open banking-enabled apps and product features across all its operating markets.

Others went further in one-to-one conversations. One bank representative spoke about the interest they are seeing from large corporate clients in using open banking to deliver a streamlined customer onboarding process.

Breaking the deadlock around commercial VRP

The question over how the industry should move forward with commercial VRP (variable recurring payments) was another key theme, and one that led to some blunt views being exchanged between banks and regulators.

For a host of reasons, there has been little progress towards an effective rollout of VRP for non-sweeping use cases. Removing the barriers to this is a core aim of JROC (the joint regulatory oversight committee) in outlining the next phase of open banking in the UK, effectively meaning that the PSR and FCA (as joint chairs of JROC) will play a significant role in determining what happens next.

While there is near universal agreement that regulators should do something to address some of the current blockages (and quickly), there is much less agreement over precisely what should be done. An announcement is expected soon, and it seems likely that this will include some form of mandate for banks to offer commercial VRP.

Beyond this, there is the possibility that the PSR and FCA will go further and set out aspects of the commercial framework, including pricing. While there is some sense in the regulator specifying areas such as consumer protection for using VRP, the suggestion of centralised setting of prices was a flashpoint. It’s fair to say that the banks on the stage would prefer to have the option to negotiate their own commercial terms.

Next stop Open Finance

The final theme to highlight is the growing interest in the UK going beyond open banking to deliver a form of open finance, followed by a much more ambitious smart data project. While it’s fair to say that most banks are more focused on monetising open banking today (and may not necessarily welcome a further compliance mandate), the regulatory momentum here is very clear. From Brazil to Switzerland, there are also a growing number of international proof points for the industry to look to when considering the next steps for the UK.

For banks, delivering on the opportunities of open banking will remain the near-term priority, but the most forward looking will also have an eye on what will come next. Open finance will open up a range of new ways to deepen customer engagement and monetise existing relationships. It seems likely that this will become an increasingly important theme in future industry gatherings.