Open Banking open enough?

The EBA has also decided to amend the SCA rules in the EU. Soon account holders will no longer have to identify themselves every 90 days that they use another party, AISP. The 90-day period will be extended to 180 days at the end of this year. The English FCA, sister organization of the EBA, had already announced this extension at the end of last year, so the change is not unexpected.

This change will not be the breakthrough that will make customers use open banking more. Let’s be honest, private consumers use open banking little by little. Consumers looks satisfied with their own bank. Moreover, current open banking offers (too) little added value.

In the business segment, small and medium-sized companies do use open banking rather often. But this is usually limited to linking an accounting system with the bank. The processing of account information and payment initiation becomes easier. Let’s not forget larger corporates which use open banking already for a long time. Even before the current open banking regulations. For years, many larger organizations receive their MT940 bank statements through other banks.  Or payment initiation (MT101) is done via an other bank then the ultimate bank.

This does not mean that open banking regulations have failed. Regulations have made banks aware of potential competition and resulted in apparently satisfied customers. Nevertheless, the banks must remain alert. Only 1 killer application can attract large parts of the customers. The bank can just end up in a back-office position and that is not the position you should want. While not truly open banking, Apple or Goolge Pay and the apps used for parking show customers switching quickly. Many people pay for their groceries with a smartphone in the store. And for years, almost no one pays at the parking meter anymore, but the parking fee is paid monthly afterwards by direct debit.