Open Banking – Scotland’s Global Opportunity

There’s no doubting or missing the rise and rise of the FinTech sector.

In August last year Financial News reported on the massive funding rounds of ‘challenger banks’ like Monzo, raising over £200m, with £ hundreds of millions more planned. Starling Bank has taken in rounds of £30m and £75m; Revolut is planning an additional £390m on top of $800m thus far.

As the Scotsman wrote the race is on for Open Banking, and there is a unique opportunity for Scotland’s Fintech innovators to lead it, a viewpoint written by one of the local pioneers Money Dashboard.

The country has a deep history and presence in banking, and a highly innovative tech sector – The intersection of the two offers a hyper-accelerating opportunity for Scotland’s economy.

Digital Disruptors

It’s reached a scale now where FinTech startups are the ones buying banks.

Speaking at the Wired conference the Revolut CMO Chad West talks through this massive wave of disruption, who describes it as the inevitable consequence of traditional banks having failed to make their offering open and transparent to customers, and failing to give them control over their money.

As FinExtra writes banks are living through an “extinction phase” as they look to survive the asteroid that is digitisation and the new competitors it ushers in, warns Stephen Bird, global CEO, Citi, speaking at the Hong Kong Fintech Week conference. Threats will come from all angles.

Research from The Financial Brand shows just how important and impactful the trend will be for the banking sector:


The nature of this disruptive threat is exemplified particularly by the entrance not just of startups but of ‘big tech‘ players like Apple and Google, set to offer current banking accounts.

The threat is considerable. Not only do digital banks offer the type of convenient services that consumers crave in this day and age, furthermore new challenger banks are trusted more than the traditional big five. Of course existing players can harness the same forces and utilize their legacy to their advantage. For example Western Union is digitally transforming themselves for a new era of global money transfers.

Open Banking – Scotland’s Global Opportunity

At the heart of this disruption is ‘Open Banking’. The term refers as you might expect, to the use of open standards within the banking sector, to encourage and enable better interoperability between the banks, to achieve more integrated consumer services.

Banking Technology explains What You Need to Know, and Michael Gardner provides this excellent overview, highlighting the challenges and opportunities the trend will present, how banks will need to master better UI strategies and the use of APIs. The Open Bank Project lists a plethora of exciting startups pioneering different niches it exposes.

The enabling catalyst is open standards. The Open Banking Implementation Entity was created by the UK’s Competition and Markets Authority to create software standards and industry guidelines that drive competition and innovation in UK retail banking.

These standards enable banks to adopt more flexible API-based methods of systems integration, highlighted by the perfect example of the point of this article, a trend being pioneered by local Scottish banks.

In this documentary experts including Kevin Hanley of the RBS explain how they’ve shifted from ‘point to point’ integrations between business systems, to APIs because these are more efficient and critically, enable the open ecosystems that stimulate creative innovations that power new products that customers value.


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