Open Banking Is Caught In A Quagmire, Warns Future Of Payments Architect

March 20, 2024
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Open banking has the potential to solve a lot of issues in UK payments, the Future of Payments review author Joe Garner said during Pay360. However, he pointed out that there needs to be changes before this happens.

Open banking has the potential to solve a lot of issues in UK payments, the Future of Payments review author Joe Garner said during Pay360. However, he pointed out that there needs to be changes before this happens. 

“We need sustainable commercials around open banking,” said Garner, who was tasked by UK Chancellor Jeremy Hunt with leading the UK’s Future of Payments Review last year. “And it feels to me like it has been caught in something of a quagmire.”

“We started building this thing in 2016, we really ought to know what we should be charging for it now.” 

Another issue, according to Garner, is consumer protection. 

“People are saying you don’t need consumer protection to grow open banking, and they’re probably right, you can grow without consumer protection, but do we really want to?” 

Garner argued that without some form of protection, consumers will have nowhere to go in case of a dispute.

“There needs to be something that means that there is not a car crash when things go wrong," he said. 

During the Q&A session, Garner said that open banking was an area where his point of view had shifted throughout the review. 

Garner, former CEO of a CMA 9 bank and Nationwide, acknowledged the concept’s “difficult birth” in the UK. 

“In the course of this work though, I was deeply impressed that incumbent and fintech firms are starting to use the open banking capabilities to really deliver on impressive customer journeys.” 

During the discussion, Garner also critiqued the UK's current state of affairs for account-to-account payments (A2A), which he said remains "clunky".

"It's not bad, advocacy for that journey remains at around 70 percent, which is the global average, but when you benchmark it against a UPI or a Swish or a Pix, those journeys are up in the 90s."

Garner warned that if that journey is not improved soon then "we're going to start becoming a little bit old-fashioned". 

Garner also said that his team had "prodded at" issues with card fees "qualitatively and quantitatively" but data showed that costs are about in line with global average. 

"There was a lot of emotional frustration about the sense that there is no alternative," he said. "Merchants are particularly in an environment where people feel choice is as important as value in this space." 

During the conference opener, Garner also reiterated the need for the UK to adopt a payment strategy to work towards. 

“There is no clear vision or strategy of where we’re going overall. If we have no clear vision of where we’re going overall, how can you possibly know if you’re going to get there or not?” he said. 

A really clear vision has “people lining up towards it”.

“If you don’t have that, in that darkness, people default to lower-level rules and bits of regulation. The landscape gets much more fragmented as people try to hold on to something.” 

He emphasised: “We need a north star, a statement of vision.”

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