Fintech firms unite again over Open Banking
Fintech firms have come together to offer another robust defence of Open Banking just days after rebuffing claims from Starling boss Anne Boden that the initiative had failed.
Speaking at an event organised by Open Banking Excellence, speakers from leading fintechs including Plaid, Token and Klarna argued that Open Banking was underpinning the rollout of contactless payments and was on the cusp of widespread adoption.
Farid Sedjelmaci, EU Head of Partnerships at Plaid, said: “Open Banking has already come a long way, with more than 2.5 million transactions taking place every month. We are already seeing the start of a hockey stick trend.”
He said that the industry needed to come together and form a “coalition” to talk positively about open banking and “bring those benefits to consumers”.
Todd Clyde, CEO of open banking payments platform Token, said the use of open banking technology in topping up and paying off credit cards will be a “gateway drug” for consumers.
He said: “Let’s get people using these payments and transfers because it will be a bridge and get them hooked on using Open Banking payments in a retail environment.”
The comments come after Starling Bank boss Anne Boden claimed that the initiative had been a flop and failed to ignite innovation in financial services.
But 50 fintech company founders accused her of stifling innovation this week in an open letter.
They claimed that her actions were “uncompetitive and typical of banks trying to thwart the future of innovation in financial services”.
Open Banking Q&A
What is Open Banking?
Open Banking enables consumers and small businesses to share their bank and credit card transaction data securely with trusted third parties, who can provide them with applications and services which save time and money.
It also enables people to initiate payments directly from their bank account to the account of their payee, without the use of cards.
Why was it introduced?
Open Banking was introduced in 2018 to increase competition in banking and open the way for smaller firms to challenge the big banks and drive innovation.
Ultimately, it aimed to offer people better ways to manage their money.
So what’s the rub?
Boden has argued that Open Banking has failed to tempt customers away from the banks.
She told MPs last year: “Customers are not influenced to switch banks because they can take their data with them. They switch banks because they want a better service.”