UK Looks to Open Banking Apps for Fintech Boost

March 6, 2021
Kevin Larkin

There’s no doubt that Brexit has left the UK in a tough spot regarding business competition. Now severed from the EU, Britain has had to get creative about how they will go forward to ensure they can remain dominant in their strongest industries and interconnected to their greatest reliable market. The fintech industry is easily one of Britain’s strengths, so much so that they are looking to become the global epicenter of cryptocurrency transactions. In order to remain competitive in this sector, the UK is now using Lithuania primarily for obtaining licenses as well as allowing “dual class” shares and lowering “free float” for a period of time to get them back on track. Now to remain competitive, Britain’s competition watchdog has recommended that they take up open banking apps in an effort to generate new fintech startups. Open banking is essentially a method for third-party apps to compete with larger banks by accessing customers’ accounts in order to facilitate transactions easier, as well as make better loan offers.

This is certainly a good move for Britain, as it allows more fintech startups access to better resources to remain competitive with the outside world. So far open banking has seen much success, as there are currently hundreds of apps available that use it and over 400 more in the works. The Competitions and Market Authority, or CMA, have acknowledged that it appears that larger banks are welcoming open banking with open arms, but this may not be the entire truth, since this would mean increased competition in their space. A lot of this process comes down to proper big bank regulation, to ensure that they do not halt progress to reduce competition in an increasingly crowded space. This will take a lot of attentive care and effort, as it has been widely agreed that fintech is one of Britain’s crown jewels at the moment, and any chance to increase their proficiency in the industry to survive post Brexit is a mandatory risk to take.

At the moment of writing, there are over three million users currently in Britain who use open banking, and with this announcement that number should only continue to rise. Right now the current rate to which new users are being added is about a million every six months. Most of the apps using open banking are unsurprisingly fintechs, which is crucial for the continued growth of the sector.

Leave a comment