W&F Q1 2023

13. If a lender wanted to take this a step further, and use open banking to manage customers’ loan repayments, then a Payment Initiation Service Provider licence could be required. Both of these options would of course require additional systems and controls, and compliance oversight. Automated decisions made on the basis of open banking data will need to be closely monitored and validated regularly. We have seen some examples already where banks have failed to publish accurate information, or not published the required information through Open Data APIs. This demonstrates that despite the technology, there are still data accuracy risks in play. Consumer uptake has been slow, with the latest Open Banking report in June 2022 stating that only 10–11% of digitally enabled consumers are estimated to be active users of at least one open banking service. This may well be because open banking hasn’t been heavily marketed to consumers, or it could be that consumers are put off by the level of intrusion into their personal data that open banking gives to firms. Given these barriers, I don’t think we are in a position where open banking can be enforced on all lenders, BNPL or traditional. However, we have seen regulators encouraging the use of technology solutions to help firms to keep up with innovation and technological advances in areas such as fraud and anti-money laundering, so I do expect that open banking will be accepted as a suitable method for lenders to obtain and verify data in support of their responsible lending practices.