Australia has begun its trek towards an Open Banking Regime, but still has a lot to learn from the UK, which is much further down the implementation process.
Chris Michael, the Chief Technology Officer with the UK’s Open Banking Implementation Entity (OBIE) spoke with InnovationAus.com about the challenges and the journey the UK is facing in the implementation process.
Chris stated that there are a number of initiatives and standards across Europe which have been implemented but there is no ONE person forseeing the whole implementation process. Chris believes having that person is key to making the process successful.
He mentioned that in the UK, the nine biggest banks (Known as the CMA9) had to pay for the implementation entity and for adopting the standard. The standard that is being created is a mandated standard for the nine banks, and optional for the others.
Dr Michael’s OBIE is working on the critical API standard for read/write data which are set to be published in August.
“We were set up by the Competition and Markets Authority. I think it’s quite a similar construct to what you’re doing in Australia, which is interesting to see a central body or group that is responsible for not just creating the standards but making sure they are implemented.” Chris Michael (InnovationAus)
The standard is set out to be a totally open standard that everyone can contribute to globally and anyone can implement the standards quite easily. A version three of the API is in the works which is set to be published in August.
The standard technically requires banks to be live in the market either with an API solution in place or a fall back by September 2019 and have a testing environment set up by March 2019.
“In terms of Australia Dr. Chris Michael commented, “I think you need to think about Australia having enough time to test and validate things.” (InnovationAus)
Dr. Michael mentioned that this is not to be seen as a one off process, Europe is falling into the category of looking at it as a one off implementation. Having no game plan going into March 2019. It is very important to have enough time to test the standards.
Dr. Michael says identity is at the heart of unlocking how the APIs work.
“The most important thing is getting the security model right: both in the point of view of protecting the customer with their credentials and banking credentials and how the customer authenticates with a third-party or a bank.” (InnovationAus)
The standard has to be set in a way that third parties and vendors have access to it. If there are discrepancies in the security model then it causes a huge barrier to entry for third parties involved in creating and integrating their applications with the banks.
Security would also pose a huge issue from a user experience point of view. It makes it hard when different banks have different processes in validating and approving user data, the process makes it less user friendly.
Don’t Miss Chris Michael at the Open Banking Conference.