As new regulations come into force across Europe in 2018 with the Second Payment Services Directive (PSD2) and open banking in the UK, financial services companies big and small, from multinational banks to nimble startups, are busy getting to grips with the opportunities and threats these new regulations create.
Open banking forces banks to make customers' financial data available to be shared with trusted third parties via secure application programming interfaces (APIs). This will shift their role from being one-stop-shops for financial services to more open platforms where consumers can start to embrace a modular approach to banking, opening the door to innovative fintech startups to offer consumers better ways to manage their finances online.
Major banks are scrambling fast to not only comply with the regulation by opening up their APIs, but are also looking to leverage the new open landscape to separate themselves from their competitors and avoid being bitten by these fintech startups.
Take HSBC UK, which proved itself to be an early mover when it comes to PSD2 by launching a Connected Money app in May, allowing customers to see all of their accounts on one screen, even if they are with a rival bank.
However, UK challenger banks like Monzo and Starling, as well as some other fintech startups listed below, have been working towards the idea of open banking for some time now. Here's how they are setting themselves up to take full advantage of open banking...