By Emma Rumney
Financial technology firms were supposed to start breaking into mainstream banking this month when new rules forced Britain’s nine big banks to loosen their grip on the industry
But many fintech companies are still waiting with frustration on the sidelines after the banks delayed making the changes.
The impact of the rules, which require the banks to open up their data so other companies can target their customers with tailored products and deals, was always expected to be gradual.
But six of the nine banks have asked Britain’s regulator for an extension to the January 13 deadline for putting in place the ‘open banking‘ regulation, which overlaps with a new European Union directive known as PSD2.
A number of Britain’s most well-known fintech firms told Reuters they have had to put their own plans on hold or decided to put off making them altogether.
“We have decided to postpone our open banking implementation until all the banks can prove they have… all the required data available,” said Steve Tigar, CEO of app Money Dashboard, which allows users to see all their bank accounts in one place.
The rules could shake up British banking by letting smaller rivals challenge the dominance of large players
Only Lloyds Banking Group, Dankse Bank UK and Allied Irish Banks had launched all the technology needed to share their all of their customers’ data by the deadline.
The other six asked for extensions of between a couple of weeks and a year, for some or all of their customers’ data.
Fintech firms can start testing their own systems with what is available now, but the firms Reuters spoke to said they wanted all the banks to be up to speed first.
A DOWNSIDE SCENARIO
The Royal Bank of Scotland (RBS), HSBC, Barclays, Santander UK, Bank of Ireland and Nationwide Building Society all asked the CMA for more time to make the changes.
A senior executive at one of Britain’s biggest banks said the regulations and increased competition could cost the industry between six and ten percent of revenues.
The Bank of England has estimated the largest lenders could lose more than one billion pounds ($1.38 billion) in aggregate profits by 2023.
For some, this meant the delays were not surprising.
“There’s very little incentive for (banks) to play ball with this, because it’s just a pure downside scenario,” said Steve Graham founder of fintech firm Teller.
The banks said they needed more time due to complexity in implementing the changes or to ensure the technology required to share data was secure. They say they are committed to the new rules, which present an opportunity to deliver a better service to their own clients.
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