Closing in on the open banking opportunity

At the time of writing, we have just marked the one-year anniversary of PSD2 and open banking coming into force in the UK.

This new regulatory framework is designed to open up the banking market to new providers, ushering in a new era of digital platforms to support customers in ways they had never thought possible or even imagined.

While the banking apps on your phone might look similar to how they did a year ago, the lack of a "killer app" belies the hard work and strategic decisions that are happening behind the scenes.

As the one-year anniversary loomed, we spoke to 130 financial services leaders to get their impressions of where the market is heading and to find out where companies are investing, how they're going about this and about their biggest challenges and opportunities. 

Belfast's fintech scene

There is an excitement brewing around Belfast's fintech scene. For such a small ecosystem, there have been a high volume of companies appear in this space over the last few years with ideas ranging from B2B to dark web monitoring and data management platforms.

Then in September 2018, Belfast's first dedicated fintech co-working space, Catalyst Belfast Fintech Hub, also opened for business. Located in Danske Bank's city centre headquarters, it is dedicated to the growing cluster of local early stage fintech companies that are ambitious to scale and expand into new markets evidencing the growth of the sector in Northern Ireland.

Behind the scenes

2019 is going to be a pivotal year in terms of regulatory-driven change, fintech growth and investment and therefore increasing competition for both banks and fintechs, with some interesting market dynamics at play.

Of the 130 people we spoke to, 84% have open banking products in development or ready to launch – suggesting we are on the brink of a tidal wave of innovation. Having a clear strategy and moving on it quickly will be crucial to gaining a foothold as the market evolves, and as competition for a slice of investment funds, technology budgets, partnerships and customer app space intensifies.

Indeed, 66% of respondents expect the market to become more consolidated with larger banks and corporates buying fintechs and smaller banks to keep pace with the speed of product development needed to succeed under open banking. Banks and non-banks see big tech companies like Google, Amazon, Facebook and Apple as their biggest threat.

The right approach

Safeguarding your business will depend on a number of key considerations. Smaller companies need to consider their business plan and do the necessary preparations to attract the right kinds of investment and partnership agreements.

New products require some careful decisions about branding and IP protection for everything from the algorithm to the name and visual identity.

All businesses will need to communicate effectively with their customers about how new security protocols and services work and implement the measures to deliver them.

Partnership agreements will need to be carefully structured and of course all businesses need to understand their regulatory obligations and how to minimise risk.

Looking ahead

To find out more about open banking, including exclusive research, advice and case studies from TLT lawyers and guest speakers, please register your interest in attending our digital banking events by keeping an eye on our events page.

You can download our report Opportunity Knocks – the future of open banking below

This piece originally appeared in Business Eye in January 2019

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at January 2019. Specific advice should be sought for specific cases. For more information see our terms & conditions 


Date published

16 January 2019


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