Why your bank is set to offer ‘lifestyle services’

Why your bank is set to offer ‘lifestyle services’

Open banking – which is to begin testing in Australia in six weeks – has forced the UK’s big banks to use financial services from other players and to offer “lifestyle services” such as sourcing mobile phone or energy plans, a leading competition regulator in Britain says.

Christopher Woolard, executive director for strategy and competition at the UK Financial Conduct Authority, said open banking, which began in Britain at the start of last year, is encouraging innovative new services from financial technology start-ups but also fundamentally changing the strategic thinking of its major banks, who have now added buttons inside their mobile phone applications allowing customers to link up products held by outside institutions.

“Open banking started as a dynamic where it was about fintechs as a threat to incumbents, but is now becoming a competitive process between the incumbents,” Mr Woolard told The Australian Financial Review during a visit to Sydney last week for the ASIC annual forum.

Planned legislation to establish a “consumer data right” did not make it through parliament before Prime Minister Scott Morrison called the election, which he won at the weekend. It may be among the first bills to appear in the government’s new term.

The open banking system is designed to open up internal bank data and processes via digital channels, giving customers and other financial institutions greater access to information.

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