- The UK’s largest account providers are making it possible for customers to make the most of their financial data and easily and securely access services from a wide range of companies that better meet their needs
- This is the first major milestone in a multi-year programme to open all payment products to a vibrant, innovative new market for financial services
- Open Banking for current accounts begins on 13 January with a managed roll-out which will complete in March 2018
The Open Banking Implementation Entity (the ‘OBIE’), the body created by the UK’s largest personal and small business current account providers to create a better way to move, manage and make more of your money, has confirmed that the UK will be the first nation to launch Open Banking when its service goes live in early 2018.
Open Banking is a term that describes a secure set of technologies and standards that allow customers to give companies other than their bank or building society permission to securely access their accounts. This means customers can, if they choose, easily use services from a range of different types of regulated companies without the need to share credentials with any third parties. They may, for example, choose to aggregate a view of all of their accounts through one provider or allow a company to analyse their account data to offer automated budgeting advice or cheaper overdrafts.
Every company using Open Banking to deliver their services has to be authorised by the Financial Conduct Authority (FCA) or another European Regulator. Open Banking runs on a well-established communications technology called Application Programming Interfaces (APIs) and is designed with customer security foremost in mind.
The OBIE was created by the UK’s nine largest personal and small business current account providers (the ‘CMA9’) in 2016, after an inquiry by the Competition and Markets Authority
(the ‘CMA’) determined that Open Banking could bring new competition and innovation to an industry it felt needed shaking up.
Imran Gulamhuseinwala OBE, Trustee of the OBIE, said:
“The goal of the UK’s Open Banking initiative is to allow consumers and small businesses the option to securely and safely make the most of their financial data. In time, Open Banking will give consumers and small businesses more choice, better services and cheaper products.
“The work we are doing here is genuinely world-leading. The UK is the first nation to implement a standardised Open Banking solution. In the UK we are creating a single technology standard enabling new services to be easily built and offered to consumers and small businesses. Open Banking will help make Britain one of the best places in the world to bank and will, in time, stimulate the digital economy.
“While the UK is leading the way, we are incredibly excited at the opportunities created by working with peers around the world, and in Europe in particular. We are in active discussions with several groups seeking to build standards and we look forward to that work bearing fruit in 2018.
“The first set of Open Banking APIs will go live to third party providers on 13 January. This is the culmination of a huge amount of collaborative work done by the UK’s largest banks and building societies, the OBIE, and companies from across the technology and financial services sectors. It’s an extraordinary achievement which, in time, could fundamentally change how we manage our money.”
In order to ensure that Open Banking is introduced to the market smoothly, the launch of Open Banking will be carefully managed. For the first six weeks, the companies offering Open Banking services will be asked to limit the number of instructions processed and only make it available to a small group of selected customers. This enables authorised third parties to be sure that their products and services are working as intended and for banks and building societies to be certain that they can manage volumes appropriately.
All of the CMA9 have different systems and ways of keeping information. While Open Banking will launch on the date specified by the CMA, some institutions will need more time in order to complete preparations for making Open Banking available to all of their personal and small business current account customers. The CMA has today issued directions to those of the CMA9 that need additional time. These directions will enable the banks to implement Open Banking for all their customers as soon as possible, bringing them into compliance with the Retail Banking Market Investigation Order, according to a plan approved by the CMA.
Open Banking will be available to the overwhelming majority of personal and small business current accounts covered by the Order in time for its release to the open market at the end of the managed roll out. The CMA directions can be viewed<here>
Gavin Littlejohn, Chair of the FinTech industry body FDATA and FinTech Representative to the OBIE, said:
“Our industry has offered services that let customers – around two million at the last count – give our member firms direct access to their accounts for several years. However, the method we have had to use, which literally ‘reads’ customers’ online banking screens, has never been what we would have chosen. We are enthusiastic about the potential of Open Banking, which provides a direct feed into and out of accounts using tried and tested and highly secure standardised communications technologies.
“There is a lot of work still to do to bring the full benefits of Open Banking to UK consumers and businesses, and we now need to work closely with colleagues in Europe to align this solution to the standards being worked on there, but this is a momentous milestone.”
Ian Major, Operations Director at Runpath and Third-Party Representative at the OBIE, said:
“After this unprecedented collaboration between industry participants, we are on the cusp of implementing a truly ground-breaking ecosystem, one that will see myriad new business models coming to market in a fully regulated environment. The benefits that will arise for both retail and business consumers will be numerous, and it is the duty of all actors to ensure trust and security remain at the heart of both emerging and established services.
“Accordingly, members welcome the “managed start” approach and will concentrate in the formative weeks on supporting the phased and controlled release of the various banks’ APIs. Adopting this method will ensure that the UK establishes a robust system for the rest of the world to learn from.”
Adam Land, Senior Director at the CMA, said:
“The UK is paving the way globally with Open Banking and it will be hugely rewarding to see the full benefits of this project unfold over the coming months. Open Banking will not only revitalise innovation and competition in this crucial sector, it will revolutionise banking for small businesses and retail customers – allowing them to more easily manage their money and find the best deal for their needs.”
While the initial launch of Open Banking in the UK covers personal and small business accounts – as mandated by the CMA in 2016 – the Chancellor of the Exchequer’s November
Budget announced that the CMA9 have committed to extending the Open Banking standards to cover all products with payments capability such as credit cards and e-wallets throughout the course of 2018 and 2019 (in alignment with PSD2).
ECB stays put but warns about surge in infections
By Balazs Koranyi and Francesco Canepa
FRANKFURT (Reuters) – The European Central Bank warned on Thursday that a new surge in COVID-19 infections poses risks to the euro zone’s recovery and reaffirmed its pledge to keep borrowing costs low to help the economy through the pandemic.
Having extended stimulus well into next year with a massive support package in December, ECB policymakers kept policy unchanged on Thursday, keen to let governments take over the task of keeping the euro zone economy afloat until normal business activity can resume.
But they warned about a new rise in infections and the ensuing restrictions to economic activity, saying they were prepared to provide even more support to the economy if needed.
“The renewed surge in coronavirus (COVID-19) infections and the restrictive and prolonged containment measures imposed in many euro area countries are disrupting economic activity,” ECB President Christine Lagarde said in her opening statement.
Fresh lockdowns, a slow start to vaccinations across the 19 countries that use the euro, and the currency’s strength will increase headwinds for exporters, challenging the ECB’s forecasts of a robust recovery starting in the second quarter.
Lagarde saluted the start of vaccinations as “an important milestone” despite “some difficulty” and said the latest data was still in line with the ECB’s forecasts.
She conceded that the strong euro, which hit a 2-1/2 year high against the dollar earlier this month, was putting a dampener on inflation and reaffirmed that the ECB would continue to monitor the exchange rate.
The euro has dropped 1% on a trade-weighted basis since the start of the year, but is up nearly 7% over the last 12 months. Against the U.S. dollar, that number rises to over 10%.
Opening the door for more stimulus if needed, Lagarde confirmed the ECB would continue buying bonds until “it judges that the coronavirus crisis phase is over”.
Lagarde also kept a closely watched reference to “downside” risks facing the euro zone economy, which has been a reliable indicator that the ECB saw policy easing as more likely than tightening.
But she signalled those risks were less acute, in part thanks to the recent Brexit deal.
“The news about the prospects for the global economy, the agreement on future EU-UK relations and the start of vaccination campaigns is encouraging,” Lagarde said. “But the ongoing pandemic and its implications for economic and financial conditions continue to be sources of downside risk.”
Lagarde conceded that the immediate future was challenging but argued that should not impact the longer term.
“Once the impact of the pandemic fades, a recovery in demand, supported by accommodative fiscal and monetary policies, will put upward pressure on inflation over the medium term,” Lagarde said.
Benign market indicators support Lagarde’s argument. Stocks are rising, interest rates are steady and government borrowing costs are trending lower, despite some political drama in Italy.
There is also around 1 trillion euros of untapped funds in the Pandemic Emergency Purchase Programme (PEPP) to back up her pledge to keep borrowing costs at record lows.
The ECB has indicated it may not even need it to use it all.
“If favourable financing conditions can be maintained with asset purchase flows that do not exhaust the envelope over the net purchase horizon of the PEPP, the envelope need not be used in full,” Lagarde said.
Recent economic history also favours the ECB. When most of the economy reopened last summer, activity rebounded more quickly than expected, indicating that firms were more resilient than had been feared.
Uncomfortably low inflation is set to remain a thorn in the ECB’s side for years to come, however, even if surging oil demand helps put upward pressure on prices in 2021.
With Thursday’s decision, the ECB’s benchmark deposit rate remained at minus 0.5% while the overall quota for bond purchases under PEPP was maintained at 1.85 trillion euros.
(Editing by Catherine Evans)
Bank of Japan lifts next year’s growth forecast, saves ammunition as virus risks linger
By Leika Kihara and Tetsushi Kajimoto
TOKYO (Reuters) – The Bank of Japan kept monetary policy steady on Thursday and upgraded its economic forecast for next fiscal year, but warned of escalating risks to the outlook as new coronavirus emergency measures threatened to derail a fragile recovery.
BOJ Governor Haruhiko Kuroda said the board also discussed the bank’s review of its policy tools due in March, though dropped few hints on what the outcome could be.
“Our review won’t focus just on addressing the side-effects of our policy. We need to make it more effective and agile,” Kuroda told a news conference.
As widely expected, the BOJ maintained its targets under yield curve control (YCC) at -0.1% for short-term interest rates and around 0% for 10-year bond yields.
In fresh quarterly projections, the BOJ upgraded next fiscal year’s growth forecast to a 3.9% expansion from a 3.6% gain seen three months ago based on hopes the government’s huge spending package will soften the blow from the pandemic.
But it offered a bleaker view on consumption, warning that services spending will remain under “strong downward pressure” due to fresh state of emergency measures taken this month.
“Japan’s economy is picking up as a trend,” the BOJ said in the report, offering a slightly more nuanced view than last month when it said growth was “picking up.”
While Kuroda reiterated the BOJ’s readiness to ramp up stimulus further, he voiced hope robust exports and expected roll-outs of vaccines will brighten prospects for a recovery.
“I don’t think the risk of Japan sliding back into deflation is high,” he said, signalling the BOJ has offered sufficient stimulus for now to ease the blow from COVID-19.
NO EXIT EYED
Many analysts had expected the BOJ to hold fire ahead of a policy review in March, which aims to make its tools sustainable as Japan braces for a prolonged battle with COVID-19.
Sources have told Reuters the BOJ will discuss ways to scale back its massive purchases of exchange-traded funds (ETF) and loosen its grip on YCC to breathe life back into markets numbed by years of heavy-handed intervention.
Kuroda said the BOJ may look at such options at the review, but stressed a decision will depend on the findings of its scrutiny into the effects and costs of YCC.
He also made clear any steps the BOJ would take will not lead to a withdrawal of stimulus.
“It’s too early to exit from our massive monetary easing programme at this point,” Kuroda said. “Western economies have been deploying monetary easing steps for a decade, and none of them are mulling an exit now.”
(Reporting by Leika Kihara and Tetsushi Kajimoto; additional reporting by Kaori Kaneko; Editing by Simon Cameron-Moore & Shri Navaratnam)
World Bank, IMF agree to hold April meetings online due to COVID-19 risks
WASHINGTON (Reuters) – The International Monetary Fund and the World Bank have agreed to hold their spring meetings, planned for April 5-11, online instead of in person due to continued concerns about the coronavirus pandemic, they said in joint statement.
The meetings usually bring some 10,000 government officials, journalists, business people and civil society representatives from across the world to a tightly-packed two-block area of Washington that houses their headquarters.
This will be the third of the institutions’ semiannual meetings to be held virtually due to the pandemic.
(Reporting by Andrea Shalal; Editing by Chris Rees
The Beaconsoft story and introducing its one-of-a-kind digital campaign intelligence platform
By Nigel Bridges, founding CEO of Beaconsoft Limited What were you doing prior to setting up Beaconsoft? Before setting up...
Top 8 Tax Scams to Watch Out For
It is tax time and that means finding the best way to file your taxes and to get a refund...
Hisham Itani and Resource Group Recognized in the 2020 Global Banking & Finance Awards®
Global Banking & Finance Review has awarded Hisham Itani the Chairman and CEO of Resource Group, Technology CEO of the...
Euro zone business activity shrank in January as lockdowns hit services
By Jonathan Cable LONDON (Reuters) – Economic activity in the euro zone shrank markedly in January as lockdown restrictions to...
Volkswagen’s profit halves, but deliveries recovering
BERLIN (Reuters) – Volkswagen reported a nearly 50% drop in its 2020 adjusted operating profit on Friday but said car...
Global chip shortage hits China’s bitcoin mining sector
By Samuel Shen and Alun John SHANGHAI/HONG KONG (Reuters) – A global chip shortage is choking the production of machines...
Iran’s oil exports rise ‘significantly’ despite sanctions, minister says
DUBAI/LONDON (Reuters) – Iran’s oil exports have climbed in recent months and its sales of petroleum products to foreign buyers...
Nissan to source more UK batteries as part of Brexit deal ‘opportunity’
By Costas Pitas LONDON (Reuters) – Nissan will source more batteries from Britain to avoid tariffs on electric cars after...
Muted recovery for UK retailers in December ends worst year on record
By David Milliken and Andy Bruce LONDON (Reuters) – British retailers struggled to recover in December from a partial coronavirus...
Chinese phone maker Honor partners with key chip suppliers after Huawei split
By David Kirton SHENZHEN, China (Reuters) – Chinese budget phone maker Honor said on Friday it had signed partnerships with...