PRMIA London Open Banking Event Re-cap
Wednesday, 25th October, 2017, 6.30-8.00pm
BCS Consulting / PRMIA
Kathryn Kerle (PRMIA London Regional Director) opened the meeting by introducing Open Banking as the largest risk in the banking sector that no one has heard of. She gave a quick overview of PRMIA and the upcoming Risk Leaders conference before handing over to the Panel.
Panel Moderator – Bianca Partington: Head of Risk Appetite & Policy Framework, RBS
Ben Matthews: Managing Director, BCS Consulting
Dan Globerson: Head of Open Banking, RBS
Rory Alsop: Head of Information Security Oversight, RBS
Uttiyo Dasgupta, Head of Transaction Banking UK, HSBC
Ben Matthews provided an introduction to Open Banking, describing it as regulator driven initiative to increase banking competition by widening access to customer data and allowing third parties to initiate payments on behalf of the customer. It is creating big opportunities for the third parties, but posing big risks to the banks currently dominating the sector. A quick hand in the air survey showed that approximately half the audience were unaware of Open Banking before this event.
The panel discussed the challenges and business risks of Open Banking. PSD2 is the key regulation requiring banks to open their data by January 2018. Meeting this requirement itself is a significant technological challenge, but then once implemented the result has the potential to massively alter banking in the UK. Challenger banks and Fintech companies are the obvious threat to take market share, but the global technology giants – Google, Amazon, Facebook, Apple (GAFAs) – also pose a very real threat, particularly as they will have the ability to initiate payments.
The panel went on to discuss the operational risks, especially cyber-crime. This raised questions such as: Will third parties treat the data as securely as banks? Could the third parties themselves be fraudulent? Customer perceptions of the risks were also discussed. We heard that surveys show customers are generally willing to trust banks with their financial data, but far less so for other types of companies, ie technology enterprises. However there is a notable generation difference, with millennials being much more open with their data and trusting in new technologies. It was also mentioned that some existing cyber vulnerabilities should actually be mitigated by Open Banking. For example customer account aggregation apps that currently rely on using customer passwords and crude screen scraping techniques, will be replaced with applications that link directly to the accounts.
The final area of discussion focussed on the opportunities Open Banking is creating. Fintechs, Challengers and GAFAs centre their business around the use of customer data and they have a proven strength in developing new applications and services quickly. The panel generally regarded the key for the big banks to succeed will be to partner with these innovative third parties. Open Banking might also be an opportunity for the banks to realise which services are their strengths/weaknesses and to stream line their business.
The panel took questions from a very active audience throughout the discussion.