The new directions issued by the Competition & Markets Authority (CMA) offering extensions to Open Banking deadlines for five CMA9 banks is a public “naming and shaming” according to a Payment Systems Regulator panel member Mark O’Keefe.
“What are the ramifications of what they’ve done here?,” says O’Keefe, who is also a founding director of Optima Consultancy. “The softest approach they could have taken was not to issue directions but in some respects they’ve now started publicly naming and shaming banks that are late and slipping with implementation deadlines. You might think so what? But they’re starting to prepare the groundwork for future action and remedies.”
No fines have been issued in response to missed deadlines. While the CMA is unable to impose fines, the directions process is ultimately enforceable through the courts.
The Open Banking Implementation Entity (OBIE) - the industry body charged by the CMA with overseeing the Open Banking initiative under the Retail Banking Market Investigation Order 2017 - is also able to issue directions. As directions are in the public domain, banks may also have to consider the reputational cost and risk.
“There’s some fair slippage when you look at some of the milestones,” says O’Keefe, referencing the implementation plan (see below), “and not forgetting, and this for me is the bigger point, this is the banks’ own proposed delivery dates and if experience has taught us anything there’s a strong possibility these guys will slip again.”
The five banks issued with new directions are Santander, Lloyds Banking Group (LBG), HSBC, Danske Bank and Bank of Ireland. The directions were issued because these banks have failed to deliver all aspects of their App-to-App functionality by the date set out in the Agreed Timetable and Project Plan.
A spokesperson for Santander said by email: “The services required to deliver the App-to-App solution are complex and Santander wants to ensure that when we deliver the service to the third party providers and customers is has been rigorously tested and a series of controlled steps have been taken to full deployment. The August 22 date has been defined by Santander and we are focused on delivering to this date.”
Commenting on the new directions, trustee of the OBIE, Imran Gulamhuseinwala OBE, said in a statement the deadline misses were “disappointing” though he acknowledged that Open Banking was “gaining momentum and traction” despite it being in its infancy.
O’Keefe believes these new directions emphasise that “incumbents are struggling to make technical changes” particularly when combined with a 480% increase in incident reporting between 2018 and 2017; something that concerns the PSR panel upon which O’Keefe sits.
“The pace at which they run makes you question the faith you have in banks culturally and mentally being able to develop and deploy an app quickly. I just don’t think incumbents are capable of doing it.
“It’s becoming apparent that the banks are struggling to cope with mandatory change never mind innovative change. You see incumbents bringing out functionalities a year after it’s been introduced by the challengers,” says O’Keefe.
This week, NatWest announced the launch of its Mimo personal finance manager (PFM) following 18 months in development, according to a spokesperson.
O’Keefe points to the lengthy deployment of HSBC’s Connected Money app which is a standalone app and therefore separate of legacy constraints, he reasons.
“Back in 2016 HSBC said they were researching this beta app,” says O’Keefe, “built it and piloted it with their staff, but in the back end of 2017 they go public beta trial on iOS - which was 18 months to get a beta to public.
“Here we are in April and we still don’t have Android support despite it being promised in 2018 for rollout in March ,” he says.
A spokesperson for HSBC confirmed that Android support would come in the second quarter of 2019.