“Most people who are working on the Open Banking initiative would agree that the collective uptake rate has been less than expected,” said Matt Perks, head of transformation at Nationwide, during a presentation at Fintech Connect outlining the building society’s approach to Open Banking.
Open Banking continues to dominate the agenda as financial services grapple with the emergence of the new ecosystem, but adoption is gradual, according to Perks.
“My view on it, is that this is a positive,” said Perks. “It gives us time to make sure that the capabilities applied across the OB ecosystem are as robust as possible and ready for when adoption does start to take off.
“Our forecast data shows a jump from 7,000 members using Open Banking services in August to now 15,000. That is a small number of members compared to what we would see as good candidates to make use of OB services, which is one in every six of our 15 million members,” said Perks.
Perks pointed to the rise of contactless and Faster Payments both demonstrating slow kick off and reaching critical mass; in the case of the former through Transport for London – the UK capital’s transit authority - adoption, and the latter, through PSD1 outlawing outbound personal payments.
While Perks believes a gradual approach is important, that is not to say that 2019 will not be an important year for the building society with their API and payment strategy set to mature.
“We’ll deliver more capabilities through 2019 and build out the ecosystem in order to build out capabilities beyond what is currently live in the market. We’re currently on the second version of our API, with version three coming in March .
“We will also broaden the scope of the products available to include credit cards, other payments accounts as well as the ability to initiate different payments types,” said Perks, explaining that 2019 will be the year to set up forward dated and regular payments. “We will also introduce APIs that will give us the ability to provide confirmation of funds services, broadening the third party provider use cases.”
The building society’s participation in Open Banking, which Perks described as “we’re not in Open Banking to make money or be cool, only to make a difference”, is one driven by a social good. This influences the type of products and services Nationwide will roll out, according to Perks.
In particular, he singled out personal finance management tools which are currently “awash” in the market, questioning what societal need they address.
“This is where Nationwide looks at the squeezed and struggling demographic who have difficulty saving in the long term. The gig economy has also given rise to a workforce that has regular financial outgoings with irregular income.
“All of this indicates that there is a real market for high control or self exclusion products. That’s why we’ve opened our OB for good initiative, collaborating with tech companies and financial advisories to filter the market to offer products to those who need it the most.
“It’s also no secret that we’ve registered with the FCA and the OB directory to provide account initiation and payment initiation services to our members. We won’t provide those services until we think the time is right. That means making sure we have the engaging customer experience and making sure the whole ecosystem is scalable and robust. Security is the biggest thing that could undermine trust.”
It would seem that the major barrier to those services for societal good do indeed hinge upon consumer trust, believes Perks.
“Consumers don’t know what Open Banking is and they’re not happy with giving access to their personal data.
“Fundamentally, consumers don’t need to know what the initiative is, they only need to understand the value exchange. No one called social media, open personal data before it took off, it was something people wanted to engage with because they provided a compelling value exchange,” said Perks.
“People still fundamentally trust large incumbents with their money,” said Perks, “which is a very different relationship to the one that exists to personal data. That will change over time and as an incumbent we’ll need to focus on how we build out the trust we have today.”