- FCA fines BOS for failing to report suspicions of fraud at HBOS Reading
- Santander launches new mortgage option with bonuses for products chosen by the customer
- P2P travel money provider WeSwap hits £250m in swapped currency
- Traditional banking is finished and cryptocurrencies are mainstream, says deVere CEO
- Barclays Mortgages improves first-time buyer product
- Mark Carney’s swansong looks to the future and digital innovation
- NatWest current accounts can now be opened with a 'selfie' expired
- EBA publishes ‘Opinion’ on elements of strong customer authentication under PSD2 expired
- Barclays/Cebr report challenges nation to think differently about wealth expired
- Lloyds accepts findings of FCA’s investigation into HBOS Reading expired
- Fed Board releases results of supervisory bank stress tests expired
- Financial services will not be found lacking in the ‘green industrial revolution’, says UK Finance expired
11th January 2019
Open banking poses a significant challenge to traditional banks, says World Wide Technology
This Sunday (13/1) marks the first anniversary of the Open Banking initiative, which was designed to increase competition and ensure a better experience for account holders. The last year has seen a sharp rise in the number of new Fintech start-ups entering the market, putting 35 per cent of the revenue of traditional banks at risk.
With competition intensifying, traditional banks are struggling to keep pace. Some are trying to move to a more nimble operating model in response – including launching their own digital banks. But the high costs of doing this, as well as the infrastructure implications, make this a very difficult task, according to Dave Locke, Chief Technology Advisor at World Wide Technology.
Mr Locke said: “In the last year, the Open Banking initiative has contributed to a significant surge in the number and type of financial service providers. As a result, we are seeing an unprecedented amount of change from traditional financial institutions that need to safely unwind their technical debt, much of which is motivated by the need to compete with new entrants in the market.
“However, the complex nature of existing systems built with conflicting metrics over the years acts as a significant barrier to this. Legacy infrastructures are typically built from an interdependent patchwork of applications, which communicate with one another in complicated ways.
“Challenger banks, on the other hand, are born on the cloud and don’t have to contend with the legacy IT structures of most traditional banks. This enables them to better organise their operations around the customers’ needs and provide incremental improvements to their systems – in a way that legacy banks have difficulty doing.
“Currently, banks have two major advantages over the latest Fintech players: an established customer base and the customer data that comes along with this. To capitalise on this and stay competitive, they must first gain extensive insights into the existing infrastructure to create a real-time picture of the entire network.
“They can then use these insights to create a roadmap to their desired business outcomes. Once this level of visibility has been achieved, banks can confidently rationalise the way that different applications share data within the system, allowing them to achieve the level of agility they need to stay viable.”