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Open Banking
Micawber
Posted: 20 October 2017 08:20:55(UTC)
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Has anyone here focused on what the risks and benefits of Open Banking are? Now approaching with the speed of an express train. Apart from predictable IT disasters at banks and financial institutions, how will your bank be implementing this new regulatory requirement? Will customers have the right to prevent their details being available via the new interfaces? What is the default position - opt in, or opt out?
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geoffrey Walton
Posted: 20 October 2017 08:41:52(UTC)
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I had a letter from Barclays about this yesterday, and whilst I have only skimmed it, it does say that you have to "opt in" for things to happen.

I will read again in a day or so, but cannot imagine that I would ever need or use it.
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Tony Peterson
Posted: 20 October 2017 08:47:38(UTC)
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BBC's Moneybox has addressed this disaster waiting in the wings.


We intend to opt out. We already endure enough telephone harassment from data shared with crooks, in spite of the telephone preference system and the ineffective ICO.

But thank you, Micawber, for drawing attention to an upcoming problem.

I think it is already an outrage that banks share our data with outside agencies like the credit reference companies, effectively simply privately-run espionage agencies. If you reflect on the role of the US credit reference agencies during the credit crunch you will see what I mean.
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Micawber
Posted: 20 October 2017 08:53:29(UTC)
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Tony Peterson;52156 wrote:
BBC's Moneybox has addressed this disaster waiting in the wings.


We intend to opt out. We already endure enough telephone harassment from data shared with crooks, in spite of the telephone preference system and the ineffective ICO.

But thank you, Micawber, for drawing attention to an upcoming problem.

I think it is already an outrage that banks share our data with outside agencies like the credit reference companies, effectively simply privately-run espionage agencies. If you reflect on the role of the US credit reference agencies during the credit crunch you will see what I mean.


I entirely agree.
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Tony Peterson on 20/10/2017(UTC)
Money Spider
Posted: 20 October 2017 11:22:38(UTC)
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I wasn't aware of this - thank you Micawber.
I've just listened to the piece on Money Box on iPlayer (thank you TP) - it's the episode on 7 October and the piece on Open Banking is easily identified from the 'duration slider' (its about 7 minutes long) if anyone else is interested.

It appears that you will have to 'opt in' to Open Banking, thankfully. I too am concerned that it seems that I would, in that one action, be making details of my banking (presumably all accounts with banks and possibly other financial services companies too - all companies that subscribe to the initiative) to all companies that join the initiative.

So, as TP highlights, there is a huge likelihood of unsolicited offers.
Secondly, there is the whole security issue of where your data is stored and how, along with who is liable when something goes wrong (which inevitably it will for a new, ambitious service).

The only benefit I hear being stated is that "customers will be offered better deals". This sounds like the current furore over energy costs - there is already plenty of information available on better offers and its is relatively easy to switch suppliers (energy, telecoms, banking etc.). This initiative seems to be trying to address those people who can't be bothered to look for and find a better deal. I accept that some members of society are less able to do this (elderly, infirm etc.) but this (in my view) would be better tackled through better information and help (charities, CAB, families and communities).

I am not intending signing up to Open Banking.
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geoffrey Walton
Posted: 20 October 2017 13:12:37(UTC)
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Here is the relevant sentence from my letter.

"If you don't want to use these new services, you won't notice any differences in the way you bank, as you will always have to provide permission for the new services"

The thought of it all and the implications are enough to put me off using it, even if I could think of any reasons why I should.
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Tony Peterson on 20/10/2017(UTC)
Micawber
Posted: 20 October 2017 13:38:54(UTC)
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One of my concerns is that it might be turned the other way round: that is, firms providing financial products that you may want, will start *insisting* that they have access to your data via open banking and a customer would effectively be excluded from e.g. getting a mortgage if they declined to give that direct access.

Another is that if there is some miscarriage (as there will inevitably be) then the institutions involved will duck and weave to put the blame on each other or on you, and you won't be able to pin any of them down, whereas at the moment, it's between you and your bank (mostly).
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DJLW
Posted: 20 October 2017 14:08:31(UTC)
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As others have said you need to explicitly opt in. So should not be a worry from an individual bank customer perspective.

From comments above it does not seem that Citywire forum users consider this a positive and beneficial option which is ironic really because this is in theory all being done for our the customers benefit.

Possibly the only other group with a less favourable view of the change is the banking industry itself. For many the changes will involve significant cost and risk as they try to implement string and sellotape solutions on their existing spaghetti like legacy systems.

But obviously the regulatory and competition inducing bodies know best...and perhaps it will enable lots of new offerings from the startup and fintech community that customers value and save money on.

One self serving but perhaps valid pushback that the banking industry is putting forward is the Risk to Customer data i.e. how can the fintech company operating using a laptop as an IT platform provide a suitable level of security for customer data( if we can’t....)



DJLW
Posted: 20 October 2017 14:20:11(UTC)
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Micawber;52169 wrote:
One of my concerns is that it might be turned the other way round: that is, firms providing financial products that you may want, will start *insisting* that they have access to your data via open banking and a customer would effectively be excluded from e.g. getting a mortgage if they declined to give that direct access.

Another is that if there is some miscarriage (as there will inevitably be) then the institutions involved will duck and weave to put the blame on each other or on you, and you won't be able to pin any of them down, whereas at the moment, it's between you and your bank (mostly).



Re the mortgage example I think this is a little unlikely as these changes won´t make available any new data that banks cannot get at now via credit reference agencies i.e. the information they need to decide if you are a good credit risk - what might change is the way you are asked to provide this information as per your example but I think the banks would be on pretty thin ice from a treating customers fairly perspective if they effectively said you gave us the info but we didn´t like the way you sent it to us.

That said to argue against myself doesn´t this type of thing happen already i.e you can only have this product with an attractive interest rate if you use our online banking service?
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jvl on 20/10/2017(UTC)
DJLW
Posted: 20 October 2017 14:27:31(UTC)
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Not sure link will work but some interesting stuff here

https://thefinanser.com/...wns-customers-data.html/
jvl
Posted: 20 October 2017 15:33:12(UTC)
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I'm all for it. The more open the market the better, surely? I like open markets and I like APIs (I'm an IT developer. They make things a lot easier.).

If I allow read-only access to an online dashboard that brings together all my accounts and adds services to them, I could see that being convenient to me.

I may get cheaper products if certain parties know more about me - for example, cheaper credit cards or loans based on their increased knowledge of me. That's surely better than crooked, closed, credit reference agencies cornering the market!

Security can't be worse than existing, antiquated, bank tech (old banks prefer to spend money on bonuses rather than upgrading IT) and any selling to you, if you allow it, is bound to be more relevant. Nothing's more annoying than bounding to your old tech devices, like your home phone or letterbox, only to hear or see something not even relevant. With new tech I can screen it out, not even see it.

If access to data is made easier, this opens up opportunities for new companies to sell services, some existing and some we can't even think of yet.

I can imagine, for instance, not being bothered by so many false positive security calls when I try to use my credit and cash cards. Sometimes you can be blocked from using cards for a time while they wrongly guess it may be fraudulent use...

If you allow it, perhaps competing food quotes if it's determined you tend to shell out for a takeaway or meal at a certain time every week? Etc. It could really boost the economy.
Micawber
Posted: 20 October 2017 15:39:11(UTC)
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jvl;52176 wrote:
I'm all for it. The more open the market the better, surely? ....


I'll see how you get on, and how many ghastly snarlups there are reported in This Is Money's agony columns, and how many cases of fraud and identity theft derived from the outing of this sensitive personal data, before I let anyone but the taxman and Mrs M have all my details in one place.

Time for some in-depth articles in Citywire? Presumably the investment platforms from HL downwards are required to implement these open APIs, aren't they? Or are they?
geoffrey Walton
Posted: 20 October 2017 15:47:11(UTC)
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Sorry about the long link, not worked out how to do it any other way.
Here is .pdh from BB on the subject.

https://www.home.barclay...lds%20January%202017.pdf
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jeffian on 20/10/2017(UTC)
jeffian
Posted: 20 October 2017 17:01:17(UTC)
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I must admit this is all news to me and thanks to those for bringing it to our attention. I'm with HSBC and I haven't had anything from them yet on the subject nor can I find anything on their website

I've only skimmed the Barclays document posted above, so I've probably got the wrong end of the stick but the weakness I see is this -
I regard myself as relatively sophisticated financially and, whilst I don't think my affairs are overly complicated, I use a variety of bank accounts, investments onshore, offshore, in managed funds, directly held shares, bonds, property etc, I am involved with Trusts and so on and so forth. I regard banks as a necessary evil, but certainly do not disclose to them all my interests elsewhere and they are the last people I would turn to for financial advice or planning. That hasn't stopped them in the past from offering me or my family totally inappropriate advice or 'products' based solely on what they can 'see' in our accounts but without being party to the wider picture. Maybe the point is that Open Banking discloses all these other things which are nothing to do with them, but I really wouldn't be comfortable with that. At the risk of boring regular readers by repetition, my cynical response to banks contacting me to ask if they can 'help' me with any sums they see passing through the accounts is "You mean, can you help yourselves to some of it" and I'm afraid my instinct is that that is what is going on here.
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Stephen B.
Posted: 21 October 2017 11:03:52(UTC)
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This is a bit like asking why anyone would use google maps when it lets google track every move you make - in practice most people (including me) do use it because it's so useful. I suspect this will be similar, in a few years there will be applications which are so useful in practice that most people will do it.
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jvl on 22/10/2017(UTC)
Jeff Liddiard
Posted: 21 October 2017 18:14:44(UTC)
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Sounds like a very convenient system in principle but wouldn't want all my information in one place for others to see. I won't be opting in.
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Mickey on 23/10/2017(UTC)
Alan Selwood
Posted: 22 October 2017 23:40:23(UTC)
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Having had a pretty clear explanatory letter from a Building Society, I took the view that I would let others be the first movers / guinea pigs, and if the outcome is brilliant and there are insignificant levels of problems and complaints over the next few years, I MIGHT consider adopting it for the institutions I already use, but will not do it where 3rd parties have any chance of muscling in or snooping.
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DJLW
Posted: 24 October 2017 09:03:38(UTC)
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Article from Wired

http://www.wired.co.uk/a...psd2-regulation-banking

Some of the points being made are clearly by self interested commentators others by more objective ones but they touch on some of the points discussed above. Examples below:-


Survey early this year highlighted that 90% weren´t aware that Open Banking was coming
May provide customers with lots of benefits... but might take a while to arrive
Data Security no worse than current banking system
Will allow customers to take back control of their data (have I heard that phrase somewhere else?)
Re switching of accounts and increasing competition one of two things will happen
1) there will be more completion / switching
2) An Amazon like enity will corner the whole market and eradicate competition
..... so most bases covered there then.






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jeffian
Posted: 24 October 2017 10:02:51(UTC)
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Thank you for that useful link, DJLW. OK, I think I understand a bit more about it now but it does seem to me that this is all constructed from the point of view of the 'plain vanilla' customer whose affairs are conducted simply via bank current/deposit accounts only. It wouldn't matter if banks restricted themselves solely to providing a simple banking service, but they don't; they try to sell you their 'products' and services and cross-sell other stuff like insurance. Unless Open Banking gains access to one's entire financial life (God forbid!) including deposits, investments, debts and liabilities held elsewhere, then I foresee all sorts of dangers. Never mind computers, as anyone with a calculator knows, you only get out what you put it in, so omitting information which isn't within the banking system is bound to give a skewed result. I fear the Law of Unintended Consequences will come into play here!
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DJLW on 24/10/2017(UTC)
jvl
Posted: 24 October 2017 11:15:41(UTC)
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I'm a little surprised at the level of negativity and perceived risk here. I guess this is the inertia and fear factor that allows big old banks to do what they like. It's not as if your money and data is currently held in Fort Knox and your current bank has your best interests at heart or provides the best service. Old systems are always going down.

It reminds me a bit of switching energy or online casino bonuses. Early adopters could benefit. Online system notices you do a lot of overseas transfers, recommends a better rate automatically instead of the bank's one without you even having to shop around. System notices you're paying too much for energy or insurance and brings up competing, cheaper, quotes? Etc. Providers compete if you let them. Do you really want to go to a load of other sites and type the information in again and again?
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Tim D on 24/10/2017(UTC)
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