An open door to the future of banking

There is a revolution under way in banking – a fast-moving landscape of apps and websites that is transforming the world of money.

‘Open Banking’ is a new secure way for customers to take control of their financial data and share it with organisations other than their banks.

Its development follows a Competition and Markets Authority investigation into the supply of personal current accounts and banking services to SMEs.

The aim is to make things simpler, faster and more convenient. For businesses, it is about making the management of cashflow and receiving payments cheaper and easier.

It gives customers and SMEs greater market choice and greater control over their money and associated data, along with better and easier access to new financial services providers in a secure environment.

Responding to its challenges traditional institutions are grasping FinTech and running with it – either through collaboration or their own R&D efforts.

Take Yorkshire Bank’s approach. It says its new technology platform called iB is transforming it into “a leading financial services innovator”, placing it at the forefront of this Open Banking revolution.

Paul Grace

Paul Grace, the bank’s newly appointed Leeds head, says: “The strategy is built around innovative straight forward banking, all enabled by our iB platform.

“It has created one of the most robust and flexible operating platforms in UK banking, able to deliver useful, simple and rewarding experiences to our three million customers.”

Grace says Yorkshire Bank has been “Open Banking-ready” since April and is working with a number of FinTech partners to further enhance its customer experience with API-based services.

He adds: “We recently announced Marketplace, our digital proposition, which is our channel for Open Banking. The aim is to host a mix of digital services that will integrate financial and non-financial tools, designed to give customers more control of their financial life.

“The FinTech industry will continue to develop more and more innovative solutions, and as a bank we are focused on developing our capabilities in this area to ensure we are able to support our SME customers in the best possible way.”

Grace says the changing nature of corporate lending over the last three years reflects the increasing importance of technology businesses generally.

He adds: “We are seeing more funding requests linked to technology as opposed to the more traditional requirements – a move away from the storage of tangible assets to more intangible data.

“For example, previously we would fund warehouses that were used to store goods for sale, but now warehouses are being built to store and operate computer servers and storage devices.

“Data analytics, which is integral to FinTech, is one of the most dynamic and interesting sectors we currently deal with.

“The intangible nature of data assets means we need to be adaptable and flexible to ensure we are able to provide funding solutions that match our customer requirements.”

Earlier this month CYBG, the owner of both the Yorkshire Bank and Clydesdale Bank, announced its deal to buy Virgin Money for £1.7bn had been agreed by shareholders.

The group will double in size, serving six million customers with total lending of £70bn. It will employ 9,500 people and have 250 branches nationwide.

It will also be double the size of the nearest challenger bank and the sixth largest bank in the country.

CYBG said it would be a “leading force in the Open Banking environment, disrupting the status quo and championing customer service excellence in financial services.”

CYBG said immediate preparations would be made to re-brand the group’s entire retail operation to the Virgin Money brand, with the rest of the customer base transferring to it in due course.

The migration of Virgin Money customers to CYBG’s platform will be phased over three years. CYBG added: “This technology platform is well-established and scalable and has already seen the successful migration of over two million Clydesdale and Yorkshire Bank customers without issue.”

David Duffy, chief executive of CYBG, said of the deal: “The combination of CYBG and Virgin Money will create the first true national competitor to the status quo in UK banking, offering a genuine alternative for consumers and small businesses.”