Open banking officially came into effect in the EU six months ago, on January 13 to be exact, however the established banks have been slow to adapt and adoption of new services has been sluggish. So what has really changed?
Alongside the European regulation of the Revised Payment Service Directive (PSD2), which has a broadly similar set of aims to open banking in the UK, the nine biggest banks have been forced to make customer's account information available to approved third party providers, if they want to of course. In theory this allows for the development and adoption of innovative new fintech solutions and a more open ecosystem of providers.
The banks were set an original deadline of 13 January to release open APIs for customer's account information but, somewhat predictably, five of the UK's biggest banks were granted more time to comply. This 'managed roll out' was then officially completed on 17 April.
So where are we now?
Commenting on the first six months, Imran Gulamhuseinwala, the implementation trustee for open banking said: "It's been a slow but sure start to open banking, as expected. We are pleased with the steady pipeline of new entrants to the open banking ecosystem and are beginning to see some compelling and innovative propositions develop which will ultimately help customers move, manage and make more of their money."
"Looking ahead, we have an intense programme of enhancements planned and we are working closely with the banks to ensure that customer experience and capability are expanded dramatically in the near future."
One such milestone was the first release of an open banking app from a major bank. The HSBC Connected Money app came out of beta in May, allowing users to see all of their current, savings and mortgage accounts, regardless of the provider - including Santander, Lloyds and Barclays.
The bank is then layering smart features on top of this wealth of data, with features for spending analysis and 'balance after bills', which shows how much a user has left in their HSBC current account until payday, once their regular bills have been taken into account.
None of the other major banks have launched anything similar but some have at least signalled an intention to launch a connected app or even a separate, digital-only challenger bank.
UK challenger bank Metro Bank took the step of building a developer portal, giving access to FCA-registered third parties wishing to build services on top of its APIs.
Metro Bank turned to API specialists Apigee - which was acquired by Google in 2016 - to build the self service portal, which includes the bank's PSD2 API documentation and a sandbox for testing API queries, initially for its Account Information Service (AIS) API.
Craig Donaldson, CEO at Metro Bank said at the time: "Our developer portal will provide third parties with the building blocks they need to develop even more products and services to help make customers' lives easier. I'm excited to see how APIs are leveraged; I genuinely think it will be transformational.”
On the fintech side there are dozens of examples of successful integrations and new services being launched off the back of open banking.
One such example is Yolt, the banking app created by Dutch high street bank ING and subsequently based and launched in the UK. Yolt claims to be the first fintech to make a secure connection to a UK bank's API, connecting to Lloyds Banking Group on 17 January 2018. Yolt has oAuth2 API connections to all Lloyds Banking Group, RBS and HSBC brands, as well as challenger banks Monzo and Starling, at the time of writing.
The app categorises payments, forecasts future outgoings and has a partner marketplace for deals on other financial services like energy comparisons or money transfers with Moneytis. It also offers money advice in-app.
Other initiatives in the first six months include the Nesta Open Up Challenge and Open Banking for Good.
The Nesta challenge has been running since January with the aim of finding innovative fintech companies building solutions on top of open banking APIs to help small businesses.
Open Banking For Good is a joint programme supported by Accenture and Nationwide building society, with selection panel members including Nesta chairman Sir John Gieve, chief executive of the money advice trust Joanna Elson OBE and Doteveryone CEO Rachel Coldicutt.
Launching in September the programme looks to apply the opportunity of open banking to help those who are financially vulnerable, be that struggling with debt or with basic money management.
Joe Garner, Nationwide's Chief Executive, said of the programme: "There could be more than 12 million people in the country who are only just keeping their heads above water in terms of their finances. Just one or two right or wrong financial decisions can make all the difference between financial health and spiralling debt.
"We believe open banking presents a huge opportunity to help people manage their money better and support a more inclusive financial services sector. We're looking for innovators to come forward with ideas to help people living on a financial knife edge – with no savings or relying heavily on credit."
Facts and figures
We are clearly still in the early throes of open banking, and that includes a lot of technical integration work. However this seems to be gathering momentum, as stats from the Open Banking Implementation Authority (OBIE) show that there have been 1.2 million uses of open banking APIs in the month of June, up from 720,000 in May.
A report by PwC and the Open Data Institute into the first six months of open banking found that by 2022 the market could be generating £7.2 billion in value.
The research, which includes interviews with executives at the big banks, technology vendors and payment providers, as well as 1034 consumers and 213 SMEs across the UK, also found that while only 18 percent of consumers are currently aware of what open banking means for them, this should reach 64 percent by 2022.
In his foreword, Jonathan Turner, Open Banking Leader at PwC admits: "It is more than half a year since the UK's open banking experiment began, and yet, on the surface, very little has changed in the retail banking landscape. In fact, if you were to bring up the topic at a dinner party, you would mostly likely be met with blank stares or apathy."
The report found that SMEs had a better grasp of open banking and the benefits it can bring them, such as integrated accounting and tax services and fast access to capital by giving providers real time access to account information, instead of filing paperwork.
However, research from Equifax found a general lack of awareness of new options for retail banking customers. When presented with a list of digital banks, 60 percent hadn't heard of any of the brands - which included Monzo and Starling banks - and only 20 percent said they would opt for a challenger bank if opening a new account today.
The survey, conducted with help from Gorkana, showed that 44 percent of respondents would still choose a traditional bank if opening an account today, with 32 percent saying that the availability of a physical branch was an important factor.
Jake Ranson, CMO at Equifax, said of the results: "Challenger and digital banks have been making their mark in the banking sector bringing attractive, consumer friendly services to market, yet many consumers are still unaware of these brands.
"The government has taken action to increase competition in the sector but there's still a lot of work to do to encourage consumers to fully explore the options available to them and make informed decisions on selecting or retaining accounts."
While there have been no disasters yet, both technically or from a public relations standpoint, there has also not been a groundswell of adoption or positive sentiment towards open banking.
However, all of this seems like a pretty normal adoption curve for a new set of services and capabilities that are related to people's hard-earned money, especially as the fintech companies have to prove out the value of open banking in order to shake the natural order of things.
The work to be done now the technical capabilities have been proved out comes in the form of education and adoption, showing the value of these new open banking-powered solutions and actually starting to save customers and SMEs money.
We'll check back in six months time.