Open Banking: Bringing Product Diversification & Consumer Choice

In a major vote of confidence in the future of Open Banking, Clydesdale Bank has integrated the DirectID Open Banking Platform from The ID Co. into its B mobile banking app. B analyses user data to make informed suggestions about spending and saving habits. Use of the platform will allow customers to see their account details and balances from all major banks and building societies in one location.


Following the passage of the second Payment Services Directive in January, the nine biggest UK banks have been opening their data to approved FCA companies such as The ID Co. and other Payment Initiation Services Providers (PISP).

We have been extremely vocal in our support for Open Banking, bringing about, as it does, a tremendous opportunity for banks and customers. In the case of Clydesdale Bank customers, they can now import banking data from a range of UK banks including: Barclays, HSBC, Lloyds Group, Santander, RBS and Nationwide, as well as digital banks such as Starling and Monzo.

Future Developments

This is an excellent start for legislation that has only been in place for eight months. For both the industry, and consumers, the future is even more exciting.

The introduction of Open Banking and PSD2 are set to revolutionise the banking sector, as new players and smaller disruptor banks can level the playing field and compete with the established players. This in turn will lead to an upsurge in the volume of innovative products that are on offer to banking consumers, which will ultimately transform the sector.

Tech Innovation

Through the use of APIs, we expect to see further innovation and growth amongst new businesses in the financial technology space, as well as within banks directly. This is in part being driven by customer expectation. Consumers in the main continue to bank with the five largest banks (Lloyds, HSBC, Barclays, RBS & Santander), but due to their size and scope and lack of direct competition, services have not matured in line with technological innovation. Savvy consumers demanding innovative products are being offered more opportunity than ever to tailor the services that they are offered by financial providers.

"Clydesdale's adoption of Open Banking is an exciting step forward in how Open Banking enabled propositions are helping customers securely move, manage and make more of their money."

Imran Gulamhuseinwala OBE, Trustee of the Open Banking Implementation Entity.

Moving forward, we are confident that account integration will be viewed as the starting point for Open Banking. Companies, including the ID Co., are building products and services that will address such diverse issues as income verification, affordability, credit risk, and Know Your Customer (KYC).

These, individually and collectively, will impact upon major issues across the globe such as financial inclusion and servicing the unbanked, allow access to credit for those with thin credit histories, and drive down the cost of lending for consumers.

Digital Banks

The view amongst industry experts is that there is now a defined movement away from viewing banks as focusing solely on money, and towards banks becoming connected spaces for digital services. How banks react and take up this mantle could be key to their success in this new era of Open Banking. We have already witnessed banks such as Starling, Monzo and Atom Bank that have developed their proposition based on the ability to provide a “marketplace” of additional features to their customers – albeit not based on Open Banking - and it is now up to the larger banks to respond.

Closing Thoughts

Open Banking has ultimately been brought about through the will of Government in order to offer consumers more choice and range in their financial products. Now that Open Banking is here and is happening, the response of the major banks will be closely monitored.

We are delighted that Clydesdale & Yorkshire Bank have understood the need to explore and implement functionality brought about through Open Banking, and we look forward to working closely with them. As more services and products are brought to market through fintech companies, challenger banks and the established players, we look forward to understanding their impact upon the industry, and ultimately the consumer.

James Varga, CEO, The ID Co.

James founded The ID Co. in 2011 with a mission to create convenience—to allow us to sign up to new products and services in seconds.

The ID Co. builds products based on (open) bank data that helps businesses like online lenders to onboard their customers efficiently by solving pains such as affordability and credit risk.

Our DirectID business products help lenders to onboard their customers by removing friction caused during the application process by the current challenges of risk, compliance, fraud, and regulation.

The products we provide solve business pains such as assessing a customer's affordability, verifying their account information, and thereby offsetting credit risk.

James is active in a number of local and global efforts to help people do more online, including the Fintech Delivery Panel (FDP), FDATA, Open Banking Excellence | Edinburgh, and Trust In Digital Life (TDL), whose mission is to create a trusted ecosystem that protects the data and assets of citizens and enterprises across Europe.