Fintechs call time on the banks grip over consumer data
Negotiations about the City’s future relationship and access to Europe will, of course, be driven by the desire to maintain and if possible to enhance London’s preeminent position as a financial centre
A UK fintech trade body has reiterated its call for a change in the way that banking and financial services are carried out in the UK. The Coalition for a Digital Economy (COADEC) has highlighted the need to move away from what it calls a highly standardised approach to the way that finance is conducted in the UK.
Particularly over the way that consumer data is controlled by major banking institutions. The coalition believes that the liberalising the use of this data would increase competition in areas such as savings pensions, mortgages and credit.
COADEC has called on Britain’s Financial Conduct Authority (FCA) to break up the bank’s monopoly on this type of information and for the UK to move to a more open and market-led approach to financial markets and products. The coalition highlighted Australia as a working example of just such a market place.
The call for change comes just after the UK has formally left the European Union with the completion of Brexit, which could allow the UK to plough its own furrow as far as financial regulations are concerned.
However, City Minister John Glenn appeared to play down hopes of wholesale reform of regulations in the UK at least in the short term.
Mr Glenn said at the weekend that: “The integrity and the reputation of London in financial services is not going to be enhanced by rapid deregulation or reckless short-termism.” adding that “What we want is a model of structure and co-operation with the EU that allows us to maintain that stability and mutual market access.”
Negotiations about the future relationship between the City of London and EU member states are due to begin this week. Rollover agreements to pre-existing arrangements are currently in place but these may lapse before a formal agreement is reached. At the weekend Italy granted UK firms a six month grace period allowing them to continue their operations in the country something the UK CBI has called for in its lobbying on the subject.
Negotiations about the City’s future relationship and access to Europe will, of course, be driven, on the UK side at least, by the desire to maintain and if possible to enhance London’s preeminent position as a financial centre.
That’s something that COADEC believe freeing up data could also achieve particularly if consumers were garnered new data-sharing rights. Thus, COADEC is calling for an end to the charges levied on fintechs by banks for access to their customer’s data and amend to the 90-day re-authentication rule which obliges customers to re-authorise the banks to release their data to third parties.
Joel Gladwin, COADEC’s head of policy said that: “ If fintech firms were given more access to data in 2021, it would increase competition in the savings, credit, mortgages and pensions markets” and that “if consumers were more in control of their banking data, it would increase trust, drive engagement and empower activity”.
When asked about the current situation Mr Gladwin added that:” It is an unnecessary barrier that is preventing consumers from accessing better financial services,”
The treatment, transfer and handling of sensitive data are just one of the areas that will be under discussion in Brussels and EU and UK negotiators begin their deliberations. Though the UK has now left the EU its business remain bound by GDPR legislation when they act in European markets and or for European customers.
It would seem logical that the UK would agree to follow the existing rules rather than try to create a complex two-tier system.
Nothing that COADEC has suggested is obviously incompatible with GDPR rather it seeks to build on and leverage existing open banking arrangements and protocols. However, it seems unlikely that any action will be taken on access to data before a wider agreement with European authorities is reached.