FinTechs urge the FCA to pull the plug on big banks’ data dominance

The Coalition for a Digital Economy (Coadec) has urged the UK’s top financial regulator to make open banking truly open in 2021 and to “break” banks’ dominance.

The advocacy group, which counts Seedrs and Tranferwise among its members, urged the Financial Conduct Authority to boost competition by making consumer data more available.

Coadec encouraged the City watchdog to introduce an Australia style open finance and more transparent market, enabling other companies than banks to engage in interfaced through which data is shared.

Speaking with City A.M., Coadec encouraged the FCA to “break banks”.

Among other things, the coalition asked the FCA to put a stop to bank charges on third party providers for accessing data and the current 90-day re-authentication rule that requires consumers to re-authorise their banks to release data to external parties.

The question of open banking has been contested for some time in Europe. For instance, Monzo’s founder and president Tom Blomfield said in 2020 that the “positive effect of open banking on innovation has been nil” despite it having officially been introduced in 2018 as part of PSD2.

“I don’t see any businesses based on open banking in Europe whatsoever,” he said.

That being said, Monzo did announce that it would introduce a new open banking feature in July, making transfers between the neobank’s and other banks smoother.

In December, FinTech Global reported that credit scoring startup Nordigen had launched a new open banking API to solve the issue of expensive solutions in the market, taking a swing at companies like Tink and Plaid in the process.

That being said, European financial institutions are mostly optimistic about open banking, according to recent research from Tink.

Having surveyed 290 financial executives from 12 European countries together with YouGov, Tink found that 70% recognised the opportunities of open banking and 67% believed the benefits outweigh the potential costs.

In April 2020, Coadec was among the eight UK tech industry bodies urging the government to do more to support the nation’s startups or risk having a generation of innovative ventures “wiped out” as the coronavirus pandemic spread across the globe.

The other industry bodies that signed the open letter pleading to the government were Innovate Finance, Tech Nation, UK Tech Cluster Group Chair, Tech London Advocates, TechUK, Global Tech Advocates and InsurTech UK.

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