Author

Dan Brightmore

Published

13 November 2024

Estimated Read time

2Mins

Ozone API has provided Open Banking Limited (OBL) with an updated model bank as the model bank provider for OBL to reflect v4.0 of the Open Banking standards 

The global open banking leader, Ozone API, has launched an updated platform for Open Banking Limited (OBL) in line with the UK’s latest standards. It is the first major update since the introduction of VRPs. 

Ozone API has successfully updated the model bank to support the rollout of the UK’s Open Banking Standards v4.0. This positions Ozone API as the first provider to deliver fully compliant APIs, facilitating the transition for financial institutions and third-party providers (TPPs) operating in the UK. 

Open Banking Standards

The changes were announced by OBL in early July. OBLv4 introduces some mandatory updates for the UK’s CMA9 banks, with some required to be completed by as early as 31st December 2024. Additionally, ISO 20022 is set for implementation by 31st March 2025. Alongside the Bank of England’s publication of mandatory updates to payment regulations. These proposed changes have been driven by several significant factors, including the deprecation of key security standards such as FAPI 1 Implementers Draft 2.  

While the UK open banking standard was initially mandated just for the CMA9 banks, it has become the de facto standard for the UK market. However, many UK banks remain on old versions of the standard.   

The OBL model bank serves as a critical testing ground for banks and financial institutions, enabling them to experiment with and refine their API implementations in a controlled and secure environment. It will serve as a vital resource for banks, fintechs, and other TPPs by providing a safe space to develop and test their APIs in alignment with the new OBLv4 standards. It is designed to help institutions comply with the regulatory changes. 

Ozone API 

“We’re delighted to confirm that we’re the first provider to launch a platform that reflects v4.0 of the Open Banking Standards for Open Banking Limited. We’re excited to work with our partners to support fast and high-quality API changes, ahead of the first legislative deadlines coming into force later this year. Ensuring a smooth transition to the updated standards is critical for banking players who want to stay at the forefront of open banking industry changes into 2025 and beyond. We are extremely proud that our market-leading platform is ready to support our customers and partners as they transition to v4.0. I’m pleased that we’re able to support the entire UK financial ecosystem to start their OBLv4 journey by providing the OBL’s model bank. Our founding team were closely involved during their time working with the Open Banking Implementation Entity in the development of the UK Open Banking Standards, and we remain committed to enabling UK banks to make the most of open banking now and into the future.”  

Huw Davies, CEO of Ozone API

Open Banking Limited

“Open Banking Limited is not only committed to maintaining the open banking standard, but also supporting the ecosystem by helping participants with their journey to version 4. This includes upgrading the model bank to v4 to provide as much support and coverage to participants as possible including the FCS, Standards and technical guidance.” 

Henk Van Hulle, CEO, Open Banking Ltd

Ozone API has launched a comprehensive guide and a series of educational resources to accompany the new OBLv4 standards, aimed at helping banks and FIs navigate the changes smoothly and efficiently. The guide and resources provide actionable insights and best practices for institutions of all sizes.   

Since the UK Government announced it would revisit the Data Protection and Digital Information Bill in July 2024, it is anticipated that the UK will see more regulatory changes related to open banking, smart data and the open data economy.   

Ozone API is also supporting banks in the US market this year, following the US Government announcing new open banking legislation regulations under Section 1033 of the Dodd-Frank Act.  

  • Neobanking

Author

Luke Gall

Published

20 September 2024

Estimated Read time

5Mins

Luke Gall, Product & Engineering Director at Access PaySuite, part of the Access Group, on the open banking opportunity for FinTechs


In the rapidly evolving landscape of financial services, Open Banking is no longer a futuristic concept but a present-day reality. Recent findings reveal that the adoption of Open Banking payments has surged, with 32% of financial services businesses and an impressive 58% of fintechs now offering this innovative payment method to their customers.

This uptake signifies a noteworthy shift for fintechs. Open Banking payments have overtaken Direct Debits (54%) and card payments made over the phone (4%) in terms of availability. The sector continues to expand at a remarkable pace. There are over 26,000 startups currently in operation globally. Understanding and leveraging Open Banking has become an increasingly crucial consideration for organisations to stay ahead in a competitive market.

The rise of Open Banking

Open Banking allows third-party financial service providers to access banking data and initiate digital payments on behalf of customers, provided they have explicit consent. This model not only enhances convenience for users, but also fosters greater competition and innovation within the financial sector. The growing adoption rates reflect a broader acceptance of this technology. It is driven by the potential to streamline payments, enhance user experiences, and offer personalised financial services.

In the UK, FinTech adoption is particularly robust – 84% of individuals use FinTech services daily. The push towards Open Banking is both a response to consumer demand and a strategic move for FinTechs to differentiate themselves. The rise in Open Banking adoption is a signal that financial services must adapt swiftly. For FinTechs, staying ahead involves more than just adopting new technology. It’s about leveraging tech to redefine and enhance service offerings.

Why FinTechs must embrace Open Banking

Today’s consumers demand seamless and efficient financial transactions in order to complete their purchases. Open Banking meets these expectations by enabling quicker and more secure payments. FinTechs can provide this to their customers by integrating Open Banking into their services. This significantly enhances customer satisfaction and fosters loyalty.

The rapid adoption of Open Banking by FinTechs highlights its growing importance. Those that hesitate or overlook this trend risk falling behind. Early adopters of Open Banking have the opportunity to leverage its capabilities to introduce distinctive features. These include instant account verification, real-time payments, and enhanced financial insights. It’s a crowded marketplace for FinTechs, but these advancements can deliver a competitive edge.

By granting access to banking data, Open Banking creates the possibility for FinTechs to work with other financial service providers in a collaborative environment. Around 82% of FinTech startups say this helps them to innovate more quickly and effectively. The ability to partner with others in the industry can encourage the development of novel solutions and services. These can be pecifically tailored to evolving consumer needs.

The role of third-party payment providers

Third-party payment providers play a crucial role in helping FinTechs adopt Open Banking. They do this by offering the infrastructure and expertise needed to integrate with banks and other financial institutions. These providers facilitate secure access to customer data through APIs. This enables FinTechs to deliver innovative services like personalised financial management and account aggregation. And all without the need to build costly systems from scratch.

By leveraging the established networks and compliance frameworks of third-party providers, FinTechs can more easily meet regulatory requirements. Such as those outlined in the Revised Payment Services Directive (PSD2). This allows them to scale faster and focus on enhancing the customer experience. By prioritising simplicity and convenience, FinTechs can not only improve user satisfaction but also ensure their Open Banking offerings meet the high expectations of today’s consumers.

However, FinTechs must recognise not all customers are familiar with the nuances of Open Banking. To ensure a smooth transition and maximise the benefits of this technology, financial service providers, including FinTechs, should invest in educating their customers about its advantages and functionality. This will empower users to confidently engage with Open Banking and fully leverage its potential.

At the same time, safeguarding sensitive financial data is critical to building and maintaining this trust. Robust security measures, such as strong encryption protocols like Advanced Encryption Standard (AES) and Data Encryption Standard (DES), are essential to protect data during transmission and storage. Regular security audits help identify and address vulnerabilities. Meanwhile, transparent privacy policies demonstrate a commitment to data protection.

The future of Open Banking

The trajectory of Open Banking is set to continue its upward trend, as more financial institutions and FinTechs embrace its potential. For FinTechs, this is an opportunity to lead the charge in transforming financial services. By understanding and addressing the key factors associated with adoption, FinTechs can not only stay relevant, but also drive the future of financial technology.

Embracing Open Banking is not just about keeping up with industry trends… It’s also about positioning yourself at the forefront of a financial revolution. The ability to offer innovative, secure, and user-centric services will define the next wave of FinTech success. In this dynamic environment, staying ahead of the curve requires foresight, adaptability, and a commitment to leveraging technological advancements. FinTechs that navigate these considerations effectively will not only thrive but also shape the future of financial services.

Why Access PaySuite? Getting paid should be simple – and that’s where we come in! Backed by The Access Group a top 5 UK software company, Access PaySuite is led by a team of payments experts with over 20 years’ of experience in the industry. Access PaySuite is a reliable, resilient solution that helps your business thrive with every payment.

  • Neobanking

Author

Ammar Akhtar

Published

5 March 2021

Estimated Read time

4Mins

Three years on from Open Banking launched in the UK, let’s look at what we’ve done and where we can go from here…

Earlier this year, UK Open Banking celebrated three years. Since 13 January 2018, regulated third-party providers have been able to integrate with bank APIs to access customers’ financial data, in an effort to break down the barriers standing in the way of seamless data sharing. 


The overarching goal of this new regime was to give consumers and businesses greater visibility and control over their finances, with technology at the forefront of this mission. Specifically, the pioneering Open Banking initiative was created to enable financial technology (fintech) providers to bring innovative new propositions to the SME and consumer market. 


By extension, the users of Open Banking would benefit from products that were better suited to their unique financial situation, enabling them to compare available products in order to find the best deals on the market. 
So, as we reflect on three years of Open Banking, the question is: how much progress has been made, and what’s in store for the future?


Increasing collaboration through innovation 


The introduction of a new requirement for all UK-regulated banks to allow customers to share their financial data with authorised third-party providers introduced a new era of collaboration within a previously segregated market. 

Joined by one overarching mission – namely, to drive innovation and deliver the best possible customer experience – large banks and fintech startups began forming valuable partnerships. Thanks to more efficient data sharing, incumbents, for instance, have been able to integrate propositions developed by fintechs into their own platforms, in an effort to better meet the evolving needs of the customer. 


The benefits to the customer are evident: a more interconnected and open financial ecosystem, which enables them to browse available products and access the right services for their needs. 

Since its inception, Open Banking has served to shift the power to the customer and increase competition within the sector. By utilising new apps and digital platforms, banking customers now have access to a fuller and clearer view of their finances. This allows individuals to budget more effectively, switch products more easily, and generally make more informed decisions. 


Increasing uptake


Since the initiative was launched in 2018, Open Banking adoption among UK consumers and businesses has surged. While generating awareness about its benefits has been a slow process (a recent PwC study found that only 18% of consumers were aware of what Open Banking means for them), the COVID-19 pandemic has driven Open Banking usage. 


Today, over two million users utilise Open Banking-enabled applications and services. This number has doubled since January 2020, with the pandemic likely having a strong influence on the rate of uptake. 


As disruption took hold and personal finances took a hit, many people turned towards online banking and money management apps, in search of tech solutions that could bolster their financial confidence. Since the first lockdown in March 2020, almost one in five (17%) of UK adults have started using an online banking service to help with their money management goals, with this figure rising to 45% among 25-34-year-olds. 


Without the advent of Open Banking, the accessibility and value of such solutions would be questionable. After all, many of these fintech solutions use Open Banking to connect directly to users’ bank accounts to provide a more tailored service. 


At the same time, it has also enabled financial services providers to obtain an accurate and up-to-date view of an individual’s financial situation, as well as their past and present behaviours, in order to deliver more personalised guidance. 

How will Open Banking develop?

Open Banking today generally covers personal and business current accounts, credit cards and online e-money accounts. In the future, the concept will extend to cover all financial markets – from pensions to investments and insurance. 

Now that we have built the underlying infrastructure, it will become easier to build on top of this. More complicated use-cases of Open Banking will begin to develop, with competition from non-traditional players such as fintechs and challenger banks stepping in to provide a range of new services – particularly within industries that previously strayed away from large scale digital transformation.  

As the ability to let information flow between applications continues to improve, new products and iterations of existing offerings will be built, integrated and modified at a much greater speed than before. We will shift away from a closed banking system to one that encourages new aggregators, service partners, and payment providers to add value to existing businesses models, and in doing so, create a range of new customer-centred financial services. 

Examples of innovations that we are already seeing include services that provide personalised advice to banking customers looking to improve their credit score, and applications that enable employees to save directly from their salary. 

We’ve come a long way in the Open Banking revolution, giving consumers and businesses greater control over their financial lives and the ability to choose products and services that work best for them. As we progress further towards Open Finance, this initiative will give customers greater influence over a wider range of their financial data, and offer access to enriched financial services. 

Ammar Akhtar is the co-founder and CEO of Yobota, a London-based technology company. Founded in 2016, Yobota has built a fast, flexible, cloud-native core banking platform, which allows clients to create and run innovative financial products. You can follow Yobota on LinkedIn and Twitter.