It could be easier for Facebook and Google to get into UK banking thanks to new rules starting today

Facebook Founder and CEO Mark Zuckerberg speaks on stage during the annual Facebook F8 developers conference in San Jose, California, U.S., April 18, 2017.

Open Banking rules come into force in the UK on Saturday, January 13.
The rules force banks and payment companies to share data with third parties if customers agree.
The changes are meant to encourage comparison and bank account switching but some think an unintended consequence could be opening up banking to tech giants like Facebook and Google.

LONDON — New rules come into force in Britain today that force banks to open up their data to outsiders.

“Open Banking” begins on January 13. The new rules force Britain’s nine biggest banks to share customer data with third parties if a customer agrees. The changes are meant to improve price comparison and boost account switching. (You can read a full guide here.)

But many market watchers speculate that an unintended consequence of the new rules could be to lure tech giants like Facebook, Google, and Amazon into mainstream finance in the UK.

David Birch, a digital financial consultant and speaker, wrote in Wired UK recently: “In 2018 the banks will concede customer mindshare to the GAFAMs (Google, Apple, Facebook, Amazon, Microsoft) and the BATs (Baidu, Alipay, Tencent).”

Facebook and Google have long tried to break into financial services, with products such as Pay by Messenger and Google Wallet. But these efforts have struggled to gain much headway in the UK.

Birch pegged Open Banking, which also lets the likes of Facebook carry out payments on your behalf, as the main reason he thinks this could change.

He wrote: “Next time you need to send your friend a tenner, you’ll instant-message them the money, rather than opening up your boring bank app, fiddling about finding their bank details, authenticating yourself again and finally firing off the cash. You’ll just type “+£10″ in your WhatsApp chat.”

‘Big tech companies are looking at how they could play in the market’

Caroline Plumb OBE, the CEO of cash management startup Fluidly, told Business Insider: “I think you’ll see a lot of new entrants.

“They might not see it as a wholesale competitive entry into finance — I doubt that’s how Facebook or someone like that would frame it — but there are always parts of the experience that are going to make sense for their customers, like sending money between friends on WhatsApp.”

Fluidly is one of a number of businesses primed to take advantage of open banking and Plumb has been monitoring the area closely.

“What you’ll see in the longer term is use cases and business models emerge that hadn’t really been thought about before, just like you saw in the telco industry,” she said. “All the innovation has been in what’s called the “over the top” layer — people like Netflix and WhatsApp who have invented new business models.”

Ed Maslaveckas, CEO of banking platform Bud, told BI: “There are 100% big technology companies looking at how they could play in the market, that’s for sure. And there are very big financial brands that are not part of the Big 9 that are looking at the European market very seriously.”

Bud is working …read more

Source:: Businessinsider – Finance


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