In the U.K., Open Banking could be expanded soon to allow for data sharing between a much larger range of finance companies, according to the Financial Conduct Authority (FCA).
Open Banking allows bank customers to share their financial data with other people and companies. In turn, those companies may have recommendations to switch to a different financial institution for a better deal. The idea is to give customers more knowledge and control over their finances.
The newly proposed open sharing rules would allow for a broader range of payment companies and other institutions to share financial data — with user consent — to offer rival services. If the new rules are passed, they would extend beyond banks to savings, insurance, mortgage, pension and consumer credit. The expansion would “increase innovation and choice.”
Big Tech companies — such as Google, Facebook and others — might be forced to share financial data with banks so as to prevent unfair competition.
“We want to understand what is needed to ensure [that] open finance develops in the best [interest] of consumers, and what role we should play,” the FCA said in a statement.
The new rules would also establish “dashboards,” which would do things like help consumers keep track of their finances, encourage shopping around for better deals and more. Part of the reason for the move, the FCA said, comes from the fact that there has been documented evidence of price discrimination by companies preying on customers who don’t shop around much.
“In each of these markets, the impact of price discrimination has been exacerbated by a lack of shopping around by some consumers. Open finance is a potential long-term solution,” said the FCA. The incidents that have concerned the FCA have to do with the general insurance, cash savings and mortgage markets.
Open Banking is gaining traction in the U.S., Israel and Asia, as financial corporations change their models to move toward the larger model.