UK banks are being forced to get to grips with fintech thanks to a package of measures being imposed by the Competition and Markets Authority (CMA) designed to ensure banks work harder for customers.
The final report claims that older and larger banks do not have to compete hard enough for customers’ business making it more difficult for smaller and newer banks to grow. As a result, many consumers are not accessing new services.
In an attempt to tackle this the CMA is implementing reforms that will allow more consumers to benefit from technological advancements and help smaller competitors, including new fintech businesses, to grow.
“The reforms are promising for the future of banking and getting the basics right and fixing the fundamentals will improve each customer’s banking experience,” says Nick White, Senior VP of group product at Monitise.
“This presents the opportunity, more so than ever, for banks and fintech companies to work together to accelerate technological change in the UK’s retail banking sector.”
The aim of the CMA package is ultimately to force banks to make their services more comparable, allowing consumers and small businesses to find the deals that are best for them. This could prove a huge boost to fintech startups that are able to undercut or offer better services than high-street banks, but lack the brand power of traditional banks.
One of the most important measures the CMA is implementing is the development of an open API standard for banking. This is intended to enable consumers to share their data securely with other banks, as well as third party services, to manage accounts with multiple providers though a single interface.
“Our central reform is the Open Banking programme to harness the technological changes which we have seen transform other markets,” said Alasdair Smith, chair of the retail banking investigation.
“We want customers to be able to access new and innovative apps which will tailor services, information and advice to their individual needs.”
Fintech startups, in particular challenger banks, could also benefit from the new measure designed to make it easier for consumers to switch current accounts and shop around for services outside of their banks.
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