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piqer for: Global finds Technology and society
Prague-based media development worker from Poland with a journalistic background. Previously worked on digital issues in Brussels. Piqs about digital issues, digital rights, data protection, new trends in journalism and anything else that grabs my attention.
Coming Next: The Banks Of Google And Facebook
Last Saturday, a new directive called Open Banking came into force in the UK, compelling banks to share customer data with outsiders and allowing them to execute transactions on customers' behalves if granted permission. It is mandated by the EU legislation, the revised Payment Services Directive (PSD2), which requires all payment account providers across the EU to provide third-party access.
The aim is to boost competition among financial institutions, but the new rules could also potentially open the door for tech giants to start acting like banks. So far, companies like Amazon had to negotiate deals directly with banks to get access to your banking data. With the new rules, they could take advantage of standardized APIs put in place by the UK’s biggest banks.
"It won't just be Amazon doing this. Facebook will ask for (and get) direct access to your bank account and the payments infrastructure. Next time you need to send your friend a tenner, you'll instant-message them the money, rather than opening up your boring bank app, fiddling about finding their bank details, authenticating yourself again and finally firing off the cash. You'll just type '+£10' in your WhatsApp chat," writes David Birch, a digital financial consultant, in Wired UK.
Potentially, startups could profit from the new rules too. Having smaller negotiating power than the big tech, obtaining data had been to date quite challenging for small businesses: they had to ask for your account details, login in, and then (sometimes manually) scrap all the needed information. With Open Banking, they won't have to.
Noone can really predict what will be the exact changes brought about by the new rules, but what is certain is the disruption in the banking sector, as insightfully pointed out in the article.
"No big deal, you might think. But remember that almost all customer interactions with banks are payments. If banks never see the customer making payments, they lose their most important resource: data," writes Birch.
