With Open Banking rates in the UK 43X higher than Australia, answers are evident.
nd that the number may be three times higher, its still low. In Brave New World, Aldous Huxley shares his view of a future where a supranational world state and its controllers have taken over. Pilfering ideas from HG Wells, Bertrand Russel , Pareto and others of his time, Huxley’s prophecy is of a socially engineered, class stratified society. Manual workers are bred for patience and muscle, tranquilised by new forms of drunkenness, “Soma” Using their principles of:
- Ectogenesis (babies bred in bottles)
- Hypnopaedia (Sleep teaching)
- Pavlovian conditioning with Soma
The world controllers conceive of a good and go about their control and manipulation to get there, contriving to keep the intercontinental passenger rockets running on time. Biological evolution has been stilled, democracy turned off, the individual replaced by the assembly line. Time has been stopped.
Across the modern world, the controllers are still at it, fine tuning in this instance, the money rockets. Disappointed with a lack of innovation, customer success and a pervading hegemony, the Regulators have introduced Open Banking across the world, demanding that banks expose customer data and systems for use by all, albeit with appropriate other controls.
This week, there has been an outcry in Australia over the lack of success. The Australian Banking Association (ABA) has found at the end of 2023, only 0.31 percent of bank customers took advantage of the consumer data right (CDR). As part of the ABA’s findings included that the CDR is unintentionally “negatively impacting competition in the finance sector as mid-tier and regional banks incur disproportionately higher compliance costs compared to major banks. The very friction that CDR and Open banking was meant to remove has back fired, and friction added.
In defence of the banks, whilst revenues are up thanks in large part to inflation and rising interest rates, Open Banking has been a tax. Large amounts of money have been spent implementing on going changes of the regulations at a time when the push to cloud and infrastructure modernisation has also demanded large investments. Few of these investments have been functional, deliverying customer value. Most of them have been about standing still on Customer Experience and value creation.
Whilst some have rightly challenged the 0.31% number, claiming it only represents active connections and ignores the one off connections for the valuable loan origination use case, the numbers are still low. The challenge with Open Banking uptake has been in the “So What” So a customer can see all their money in a single plane of glass. “So What” What shall they infer? What is the action they will take from that inference? Often times, all the customer gets is anxiety, over how little money and how many bills and how much debt they have. There is little help on a pathway forward. Any action requires transaction integration. To move account providers, if that is an answer, requires the lift and shift of direct debits and other standing orders that continue to make moving banks difficult. There has been little progress made in this regard, despite threats of the “great shift” to make moving banks easier.
Open banking kicked off in Huxley’s childhood backyard, Europe. The Payment Services Directive (PSD2) initiated open banking in Europe, leading to widespread adoption across the continent. Beyond Europe Brazil, Australia and Japan have all embraced Open Banking with the US, struggling as always given its strong libertarian beliefs.
In the USA, India, Japan, Singapore, and South Korea, a widespread lack of formal or compulsory open banking regimes hinder adoption as screen scraping remains prevalent due to the absence of industry-wide API strategies.
The UK presents some of the best results, with 13% of digitally active consumers and 18% of small businesses using open banking services by January 2024.
The difference between 0.31% and 13% is stark. So why? There is one massive difference – payments. Whilst Australia leads in data scope, CDR covering both financial and non-financial services, the UK focuses specifically on payments and financial services2.
10 years ago, in this blog, Moroku predicted that banking would split across two lines: A small number of global scale up infrastructure banks that would compete on scale and efficiency, and the niche customer focussed challengers that would build a moat around added customer value. The reality is that whilst the first looks true, with country and regional banking cartels controlling price and innovation, smaller banks are getting squeezed, generally failing to build their moats and keep up with the technology and advertising budgets of the majors.
Australian Fintechs have attacked the big banks for attempting to sabotage CDR and Open Banking, arguing that figures on low usage misrepresent growing interest and that arguments that no major use cases have materialised are simply naive. Sure. To unlock Open Banking rates in Australia, the ACCC must accelerate bi-directional open banking and focus on read/write, i.e. payments as the next phase.
Moroku teamed up with Basiq to release powered and in 2023.
With implementation times as low as 4 weeks, Open Banking offers significant opportunities to challenger and community banks to take on the mortgage monopoly as desired by ASIC and regulators around the world by introducing
🚀 #RapidLoanApproval Customers want a conditional loan approval in the time it makes to make a cup of tea. When a bank holds all of the asset, liability, expense and income data of a customer – they can do this. With open banking lending, as in Moroku Lending, the playing field has been levelled https://moroku.com/lending
🚀 #SinglePaneofGlass Seeing your financial position across multiple providers gives customers clarity on what they have, reducing anxiety and empowering strong financial habit decision making. With Moroku Money, all banks can now deliver this and be the gateway to customer’s money. https://moroku.com/MONEY/
🚀 #FinancialPlanning Knowing where you are, where you’ve come from and where you’re going are key aspects to any journey planning. OpenBanking gives the first two data elements to establish a position on the third and enabling a map towards it. By consuming this data and displaying it within the Moroku Odyssey player maps, data driven magic can occur, overcoming the “So What?” issue above. https://moroku.com/odyssey
That there are no solid use cases or demand is highly debatable. Yet the debate is wasted.
The question is not if or how but Leadership, Courage and Vision.
Who has it ?
Aldous ?
You ?