What’s holding open banking back?
sifted.eu
sifted.eu
This is such a weak reason because it’s completely ridiculous to share your banking password with anyone in the first place.
You only need to look at mobile app stores to see that it is very common for apps to ask for more privileges than they actually need. Sometimes this is even justified to “improve” the customer experience. Why would open banking be any different? Imagine you had to grant access to your entire banking statement history in order to purchase a flight. That’s just forced “consent” and we do it every time we visit a web page.
Nobody in open banking appears to be able to adequately answer the following question: “What is preventing you from taking a copy of my data and storing it for later use?”
No, in the golden age of mass automated surveillance advertising, open banking is for trusting suckers I’m afraid.
https://www.moneydashboard.com/ is the one I use, but there are others.
Also because of a complicated authentication and registration system (with the regulator)
But the banks finally did something after they were ordered to do so. They were quite hesitant before because it weakens their control over the customers finances.
I guess I should be grateful that I got a year's worth of consulting $$$ thanks to the banks' incompetence but this should really be a solved problem especially in 2021. The regulator should mandate a spec and do frequent audits for compliance with said spec, and IDs (or other data) changing retroactively should be an immediate fail. The other problem is that there is no way that I know of to get test accounts, you have to use real accounts (with each bank) if you want to make sure.
I'm not really sure what else I'd want from Open Banking.
Further, the incumbents are few in number, and have reg-capture via revolving doors.
No, it's that the killer use case doesn't generate revenue for banks. Efficient transfer of money reduces a bunch of revenue streams (wire transfers, overdraft, late fees, check cashing...) without creating a new one. Banks would save costs, but it hurts their bottom line more.
We are unlikely to implement anything that helps poor people and reduces revenue for megacorps.
The whole payments aspect of Open Banking seems like an attempt by VC-backed companies to become gatekeepers of bank transfers for no good reason nor benefit to the end customer. They are trying to solve a problem that's inherently not there (in the UK bank transfers are already super easy to do and settle immediately) but they pretend like there is one.
If it’s possible in a union of 27 nations with originally very disparate banking systems, it’s certainly possible in America. There’s just no political will.
There's no political will because of this fatalistic B.S. There have been multiple bills presented in Congress. The result is usually the same: lukewarm support.
(My favorite: a rep talking about cutting wire fees, making them 24/7 and mandating interoperability saying they got letters complaining because she talked about banking. Nobody wrote in support. Guess what got dropped from the bill.)
It is not a matter of lack of passion or organization. It is a matter of corruption.
This is sort of like saying the wealthy have no power because look at John McAfee. Bernie didn’t propose bank interconnects. Occupy didn’t propose anything. (I was there.)
Payment infrastructure modernisation, by statute, simply doesn’t have political support in America. It’s between people who want to abolish banks and capitalism and an uncaring supermajority.
Through regulation sure, but that wasn't the parent's point. Without regulation there is virtually no incentive for banks to play ball.
I think the answer to "what's holding banking back" is often "whatever the EU is doing with banking". The question often gets asked by people in countries where the biggest banks are terrible.
The problem is not the concept of banking, the centralization or overly broad government regulations. The problem is that some (big) banks don't give a fuck about their users' experience, especially when transferring money between different banks.
This is how PayPal got off the ground. Any of these billion dollar institutions could've built PayPal, or competed it to death when it started to become popular, but they chose not to.
Maybe there's some hidden complexity that banks solve and small open banking is not capable of yet. Maybe people just want to trust big corps and even if you provide similar services they won't flock to you as much ?
More rambling: I am far from an expert on the current details, but I think that when it comes to taking care of one's savings, and the data closely tied to it, that can be used for identity theft, where we might perceive a worsening track record in institutions in general), trust is a big deal. Trust is given subconsciously sometimes, and ideally earned by things like: behavior over time (not promotions), and institutional size and inertia (why Wells Fargo still has customers, I guess), and/or observed behavior patterns relative to current events, proper staffing (competence, honesty, Golden Rule), and other indicators that suggest it is likely to remain so, to the extent of being a mental shorthand for "It's probably stupid (or not) to put my money there and let them take care of things that are really important to me".
Will Rogers I think said, and to varying degrees many have thought similarly, something like: "I'm more interested in the return of my money, than the return on my money." And data, now?
maybe there have always been more of people willing to manage others' money, than there is of confidence in trying someone new like a revolving door of trust without track record. And data closely tied to money -- same thing?
(various clarifying/fixing edits)
Yes, you could absolutely do this with each individual bank's app, but there's a little more friction there when you have to manually add the account number and sort code of your other account as a payee, etc. These payment apps made the process very simple without any extra cost.
One thing that I think will really turn people off open banking came up in a questionnaire one of my account's providers sent out. They wanted my opinion on using open banking as another set of data points for them to decide whether or not to approve applications for new accounts.
If it'll stop me needing to print out a years worth of bank statements to apply for a mortgage, great, but I don't think it's very far from a consumer thinking "open banking is the reason I was rejected for this account, why should I ever give anyone access to this."
I felt the pain of the banking industry’s stagnation recently. My grandparents asked me to take a check for them to the local bank branch to do an intra-bank account transfer. I thought to myself: “bank branch? no way, I’ll just log into the bank website and transfer between accounts”. To my dismay and surprise, I couldn’t even do that.
In the 21st century... Where supercomputers are in our pockets... I couldn’t transfer a couple thousand bucks between accounts without going to a bank branch. For the market dominant bank in PR. Had they had Bitcoin, I could’ve done this in seconds, without them leaving the house.
Oh, and don’t get me started on the embarrassment that is ACH. In 2021 I can’t send money without it taking days to settle.
The banking industry needs to step up with open protocols, interoperability and digital money. Hopefully DeFi lights this fire.
It's not a banking industry problem. It's an obsolete American banking industry problem.
EU didn't innovate their way, it was regulated into place.
The trick with an unsexy thing like low-cost bank transfers is finding a way to make it attractive to consumers at the time they select a bank.
Few people, not nobody. I picked my bank because they don't charge for incoming and outgoing wires. (Downside: no Zelle.)
This very same symptom can be seen in US and Canadian ISPs: there is just not enough money in certain markets for them to compete against each other, and they don't, so the government should definitely step in.
Perhaps the government stepping in is better for the societal “greater good”, I’ll have to think about this and come to a personal conclusion.
From what I hear in Germany, instant transfers always cost extra unless your bank account has a high fee. But that might just be us.
I have been reading about instant transfers and I think the banks don't have to pay for individual transfers, they pay a fee for being part of the SEPA system. If that is correct, then every cent you bank charges you for an instant transfer goes directly to their pockets.
I have been reading about instant transfers and I think the banks don't have to pay for individual transfers, they pay a fee for being part of the SEPA system. If that is correct, then every cent you bank charges you for an instant transfer goes directly to their pockets.
Edit: s/play it/plaid
A common place to see this is apps that enable instant transfers, like paypal, venmo, and cash app. The main way they offer to link a bank account so that you can send money from that account involves a fake authorization screen that takes your password and stores it.
Scroll down to the "how it works" section on https://plaid.com/use-cases/personal-finances/ and you can see what this looks like.
as a developer I feel like it's stifled by the entry requirements to let your app connect to a bank. You have to sign-up for weeks of paperwork shite to be allowed to open banking connect to one measly bank, or use an expensive intermediary. Make it easy to connect and watch the apps surge to fill the space.
Having to reconnect all my accounts every 90 days as some kind of safety-measure-by-committee is frustrating as hell, every time I have to do it I want to cry. At least make it a year or let me manage my own connected accounts like a grown up.
or, just Ethereum, depending on what your concept is.
Yah this