Banking

Britain WILL have a mobile banking revolution, watchdog rules, but will you switch?

By Oliver Smith 9 August 2016
Mondo is a huge proponent of open banking.
Summary

Big changes are planned for Britain's "stagnant" banking market.

You’re losing around £92 a year, just by keeping your money in the wrong bank.

And if you regularly dip into your overdraft, chances are you could save even more money by switching.

That’s according to Britain’s competition regulator, which this morning ruled that banks must embrace new technologies by 2018 that will give people more transparency over the deal they’re getting.

‘Open Banking’ is the buzzword being used.

What the heck is open banking?

Open Banking refers to the creation of an open API standard for banking, code that will make your bank account more like your Facebook account. Something which you can use to login to different banking apps (like Bud) or comparison websites to analyse, understand and manage your spending better.

Young digital banks like Tandem and financial services like Bud are already doing springing up to do exactly that, bring transparency and savings to banking.

Read more: This app will make you richer, smarter and better with money

But most people don’t bank with Mondo, they bank with Barclays and will probably never change.

That’s why the Competition and Markets Authority ruled this morning that all the leading banks must adopt Open Banking by early 2018.

“The central reform recommended by the report, an ‘Open Banking programme’, could, if implemented, transform the way consumers compare banking products,” said Mondo’s deputy CEO, Paul Rippon.

But will you switch?

The idea is that once people can better see the good deal they could be getting elsewhere, they will switch bank accounts. After that banks will, in turn, be forced to offer better deals to keep customers.

But that’s a big assumption.

At the moment the annual switching rates for ordinary current accounts are a slim 3% a year.

And that’s with recent developments like the 7-day switching service which have made it easier than ever to change bank accounts.

Mondo’s Paul Rippon describes the banking sector as “stagnant”, due to the lack of people switching.

Lets hope that Open Banking opens people’s eyes to the huge savings they could be making elsewhere, and injects a little life into this market.