Open Banking eight months on: How well are the banks’ APIs performing?

It’s now been eight months since the Open Banking reforms were put in place. Designed to put the consumer back in control of their data, the top 9 banks (CMA9) had to provide an Open Banking connection (API) that regulated Third Party Providers (TPPs) with special permissions could connect to. This allows their customers to see all their finances in one place and use market leading tools to analyse their money.

January 13th 2018 marked the start of the ‘managed roll-out’ phase, but many of the CMA9 were not ready to start testing their APIs with TPPs on this date. Now Moneyhub, one of the first TPPs to connect to any bank account via API, has connected to most production ready APIs.

But being able to connect a bank account to a TPP is only half the story. Making the process of connection a user-friendly experience for their customers is also an important consideration for the banks and is a crucial factor in the adoption and success of Open Banking. Open Banking is intended to encourage competition, make it effortless for consumers to look after their finances, and ultimately make financial maintenance easy for consumers.

A conclusion we can draw from the last eight months of Open Banking is that the challenger banks Starling and Monzo have been raring to go to embrace the new legislation and to give consumers a pain-free experience. This indicates their trust in the system as well as their own technology and products. Some of the CMA9 and other banks have managed to provide APIs that work and refresh, which is encouraging to TPPs.

However, most of the banks that have provided working connections are expecting their customers to authenticate using unfamiliar authentication processes. This is because the majority of their customers use solely mobile banking that allows them to access their bank accounts, transfer funds and even set up new payments with just a thumbprint, but in their APIs have re-introduced 'security theatre' to give read-only access to an FCA regulated third party. But, the great news is that many banks are actively working with us and other TPPs to improve user experience, and matching the connection flow via API to that of the log in procedure of their online banking apps.

The banks that are improving their APIs are aiming to match their customer experience in connecting accounts to Moneyhub, to that of the use of their banking apps. This is because over the past five years customers’ activity on banking apps rocketed by 354% with apps now an increasingly popular way to access current accounts, rising from 21% in 2012 to 61% by the start of 2017. There were 19.6 million users across the UK in 2016 with 159 logins occurring every second. Many customers will expect the same experience when connecting a bank account to a TPP as that of the mobile banking apps they frequently use.

Unfortunately some banks are still playing catch up, and we'll be releasing statistics on how well banks APIs are performing in the future. But in the meantime, Moneyhub is working hard to give everyone, banks and their customers, the most seamless experience possible.