Open Finance drives greater transparency of pensions and investments impact

The issues of pension engagement and the impact of investment are coming to a head with campaigns like MakeMyMoneyMatter, the need to build back better after Covid-19 and regulatory change. It is no coincidence.

More than 10 million people are contributing to workplace pensions following auto-enrolment, but engagement and contribution levels remain low. Traditional ways to engage people in later-life planning have not worked. And this matters, as the vast majority of people are at risk of lower living standards in retirement.

Bridging the engagement gap

One way to bridge the engagement gap is to talk about the things people say they care about. A range of studies, including the FCA, show people - especially younger people - are more likely to engage, save more and take some investment risk when their pensions are responsibly invested.  

Percentage of members willing to engage, contribute or take more risk if pension savings are responsibly invested - Data source: FCA

All investment has impact, and regulators, scheme managers, providers and members are increasingly incorporating environmental, social and governance factors as part of prudent risk management. Now, schemes’ statement of investment principles have to state how they account for financially material considerations, including Environmental, Social and Governance (ESG) considerations like climate change.   

The overwhelming majority - more than 90% of master trust pension scheme members - are invested in their providers’ default fund. Default funds provide many important protections for pension members. So why not tell scheme members about the real world impact their pension contributions are having while invested for their future within the default fund? This Quietroom video shares pension savers’ positive reaction to seeing their pension is invested in housing, hospitals and renewable energy - and horror at the thought it could be funding tobacco or coal.

A recent DCIF report showed 80% of DC savers want their pension investments to do some good as well as provide them with a financial return. Younger cohorts and women are particularly interested in the impact of their money and ESG issues (Ref. 1) so there is an opportunity to have an outsized effect engaging with these groups that have often been underrepresented and underserved.

“A recent DCIF report showed 80% of DC savers want their pension investments to do some good as well as provide them with a financial return.”

Using technology to make it personal 

Open Banking and Open Finance are secure data-sharing frameworks that enable data from utilities companies, ESG ratings and investment fund holdings to be combined with financial data sets to support a range of propositions to resonate with people.  

While millions of people are in the same default fund, a provider could share personalised communications based around members' preferences. For example, two members invested in the same default fund could receive different digital annual statements: highlighting the amount of renewable energy generated, or tonnes of waste diverted from landfill for a member with environmental concerns, while another member in the same default hears about improvements in diverse board representation or gender pay gaps. Across millions of members, or retail investors, those same preferences could inform future proposition development around thematic default funds or retail investment funds based around the UN Sustainable Development Goals. Examples are emerging through The Big Exchange (co-founded by The Big Issue) and tickr. 

The Big Exchange and the UN Sustainable Development Goals

An aggregated view of someone’s personal finances is an essential part of sound financial planning. Including ESG ratings and fund holdings into this view helps informed decision-making and sound investment diversification. For example, a holistic view of pension, ISA and general investment accounts could reveal a concentration in particular sectors or firms. Sugi is the UK's first app to check the carbon impact of investments and compare investments across a range of funds and platforms to help consumers’ build a greener portfolio.

Read more about Sugi here

With the data capabilities in place, Open Finance enables firms to cost-effectively deliver a level of personalisation and insight to consumers previously the preserve of conversations between high-net worth individuals and their wealth managers.

Footprinting everyday spending

Companies such as Co-Go are already integrating carbon and transaction data to create a carbon footprint tracker for everyday spending. Elsewhere, integrating utilities bill data could show the real payback for a green retrofit of your home, for example.

Cost-effective technology brings transparency

For asset managers, these alternative data sets can not only inform future proposition development around thematic default funds or retail investment funds, they can also be used in equity and fixed income research. More than $30 trillion - which is more than a third of the world’s professionally-managed assets - are in ESG and impact investments. Yet, as noted in a recent Columbia Threadneedle report, ESG data has been hampered by a lack of verification as researchers have relied on voluntary disclosure in annual financial and CSR reporting. Open Banking and Open Finance could provide “alternative datasets” to help “minimise reliance on voluntary disclosure”.  

Open Finance provides transparency for customers — be they individuals or companies — and employees to align their purchasing, saving and investment choices with their values. Technology, member appetite and regulatory support together mean best in class providers are tantalisingly close to bridging the pensions engagement gap.

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Author

Hannah Gilbert

Hannah is a Client Director with senior industry experience in financial services, telecoms, public and not-for-profit organisations. Hannah has co-authored policy papers including “Pensions for the Next Generation: Communicating What Matters” and has consultancy experience in sustainability, responsible investment and social enterprise. With two Masters (Economics and Sustainable Tourism), Hannah is on the EMBA programme at Cass Business School and Women in FinTech Powerlist 2019.

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References

1. https://update.lgim.com/dc-esg and https://www.ii.co.uk/analysis-commentary/most-britons-dont-know-whether-pension-line-their-values-ii513951

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Open Finance - The journey from insight to value

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This article was originally published in The Paypers Open Banking report 2020. To read the full report, please download it from The Paypers website. 

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Moneyhub was born out of frustration. Frustration at not being able to see accounts in one place; repetitive data entry; obstacles to financial planning and, above all, financial institutions withholding data as if it was theirs and not the customer’s. This was in 2014 – before Open Banking, but in the thick of the hype around Big Data.

Data is the new oil

Data is called the fuel of the Fourth industrial Revolution. Like oil, data needs to be extracted and reservoirs tapped, but concerns have grown that this can be at the expense of consumer privacy. It was soon clear that the data also needed refining if insight was the goal, but the processing was still exploitative. In financial services, it seemed that the asymmetry of information between provider and consumer was ever-widening.

Key to your data processing strategy, and your customer experience design, is how you get to know the people you’re interacting with quickly, effectively, and in context. This isn’t about extracting data upfront, it’s about progressively sharing, reciprocating and proving your trustworthiness.

Trust: the sum of transparency and consistent value delivery¹

But the value was still elusive and Moneyhub could see why. The industry needed to focus on the value it creates, rather than the value it takes. By focusing on doing this consistently, people will trust you to deliver - and trust also compounds over time.²

“The industry needed to focus on the value it creates, rather than the value it takes. ”

It means focusing on the value, meaning, and engagement you create for the people you serve. When utilising people’s data to create value for them, it means making sure they understand how their data is being used to create that value - and that goes beyond consent-based data sharing.

The role of financial services in building trust

But an industry obsessed with pushing products still has lessons to learn when it comes to the difference between leveraging insight and selling it.

We need to accept that people should control who accesses their data and for what purpose. We need to think of organisations as data custodians or information fiduciaries. That means that providers need to be relevant and useful and Moneyhub provides that missing link.

It aggregates, organises, and enriches data and then monitors it on behalf of the customer. Then, with an understanding of the customer context, actionable insights (or ‘nudges’) can be introduced to coach the user towards better outcomes. This might be through prompts, alerts, or new options being surfaced - it’s about helping people and for what exchange of value.

Harnessing insights to enable Open Banking payments

Insight is not an end in itself and the consumer needs the means to put in action decisions, simply and cheaply. Moneyhub uses money to savings, investments, and pensions, or to pay bills and reduce debts.

By being a trusted partner of the customer, the insight from income and expenditure analysis combines with navigation towards improved financial wellbeing. Helping customers by being the everyday financial coach, means that wellbeing is not a goal but a by-product of improved customer outcomes. Here are some of our practical examples of that in practice:

• Expenditure analysis shows that the customer is paying rent. There is no sign of contents insurance - so is there an awareness of the risk associated with that? Or could that rental payment history be used to support a mortgage application?

• An employer provides a range of employee discounts from retailers – as one of our clients has shown, by personalising offers based on past expenditure, the average Moneyhub user can save over GBP 70 per month, with no change in spending habits.

• Consumers are keen to invest ethically and sustainably but, in addition to aggregating and scoring their investment portfolio, expenditure analysis could be used to create nudges towards greener lifestyle options or a carbon footprint offset savings plan or donation.

• Impulse spending can be converted to impulse saving with an unplanned treat being accompanied by a self-imposed rule to sweep the same amount into an ISA or a pension.

• Variable recurring payments can be set up when goals are met or a budget is tracked.

• By adding a house price feed combined with mortgage repayments, customers can be alerted to new financing deals becoming available as the loan-to-value ratio comes down.

• With 80% of employees not sure if they are saving enough and the self-employed still outside of auto-enrolment, the adequacy of pension saving can be forecasted and nudges made to help towards a better outcome, referencing current expenditure and in-retirement lifestyle.

• Despite companies often having substantial customer data available, they continue to require customers to go through time-consuming and inaccurate fact-finding processes. With consent, the consumer can share their data, containing verified assets, income, and expenditure information.

• Consumers can self-police by using ‘appropriate friction’ such as alerts around budget overshoots or comparing the effect of saving an amount rather than spending it.

Privacy & personalisation: a mutually inclusive relationship

By never selling customer data or taking a third-party commission on product sales, Moneyhub and its enterprise clients have always respected customer interests and balanced privacy against personalisation. The value exchange is always fair and controlled by the consumer.

Open Banking is useful but ancillary to the benefits derived from holistic Open Finance.

Critically, value creation from insight is organic and relationship- based, a far cry from crass product pushing. If a product solution is involved, it is more likely to be bought than sold and more likely to be retained as it is suitable and affordable. From here, customer centricity becomes a reality rather than a slogan - and the path from insight to value is lit by Open Finance adoption.

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References

1 and 2: Greater Than X's work on Data Trust: www.greaterthanexperience.design and video.

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Author

Vaughan Jenkins

Vaughan is an experienced Sales Director with senior industry experience in financial services, especially the life and pensions, asset management and wealth sectors. He co-authored ‘The Insurtech Book’ and has worked as an associate and consultant to a number of businesses.  

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Covid-19 and the Black Lives Matter movement prompts a rise in charitable giving

The unprecedented events of the last few months has prompted huge changes in how we spend both our time, and our money. New data from our Open Finance platform reveals significant increases in one particular area of spending - charitable donations.

Data from our Open Finance platform shows consumers are spending more time at home and less time and money on trips out, clothing and shoes. Spending on clothing and shoes in particular dropped significantly, by 22% in April, 41% in May and 23% in June, compared to the same months in 2019. As Barclaycard’s research shows, consumers have instead turned to spending their money on purchases like home entertainment, ‘insperiences’ (in-home experiences), and donating to charitable causes. Our user data confirmed this, showing that donations shot up in April - June 2020, compared to the same months in 2019, as the Covid-19 pandemic and causes like the Black Lives Matter movement prompted an outpouring of support.

The stats in a nutshell:

• Spending peaked in April, with 88% more going to charitable causes than in April 2019. May 2020 was up by 74%.

• Total spending on charitable giving in June 2020 was 25% more than in June 2019.

• This compares to February 2020, pre-lockdown, when the average spend per donation was significantly lower, only 4% up from the previous year.

Samantha Seaton, CEO of Moneyhub commented: “The coronavirus pandemic has caused us all to consider our own fortunes and has prompted a surge in support for good causes. Whether it’s giving to the NHS or those on the frontline of the crisis, or more recently rallying behind the global Black Lives Matter movement, Britons have been more inclined to do their bit and donate their extra cash. Increased charitable donations are a good sign that consumers are saving more and spending less, and therefore have more disposable income to give away.

“While this is a positive trend, we may see these transactions begin to drop as life returns to normal and people are encouraged to spend on businesses that will get the economy moving again. It’s important that people find a balance in their spending and maintain positive saving habits as we move out of the lockdown and potentially into a recession. Money management platforms that are powered by Open Finance data and intelligence can give users insight of all their finances in one place. This can help them understand the state of their finances, make more informed decisions, and ultimately build up more savings. This can help give people more financial security and allow us to carry on spending on the things that are important to us.”

Head over to our Covid-19 spending tracker to get the latest insights on spending across all areas, or find out more about our Open Finance platform by getting in touch with our team today.

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For customers to get a level playing field in Open Banking, we all need to stop moving the goalposts for APIs

To misquote Robert Burns, the best-laid plans of mice, men and financial service providers often go awry.

I firmly believe that everyone in the sector puts the best intentions of their customers first in the vast majority of cases. Do we always get it right? No. Companies are made of people, and people don’t always make the correct choices. Decisions made around Open Banking are no exception.

It is human nature to put off the non-essential. We prioritise urgency at the expense of practicality, often for the best reasons. Meetings are held to decide what is ‘business critical’ and the agenda items that don’t make the cut are mothballed. Sometimes, as in the case of API implementation by CMA9 banks, that means the customer's best interests are unintentionally sidelined.

That’s not a dig at CMA9 generally. The FCA required certain banks to make data available to third-party providers (TPPs) via standardised Open Banking APIs by September 2019 at the latest. Among other requirements, the regulator insisted banks align their API offerings for TPPs with their own customer offerings. It was a big piece of work and, given the complexity, the FCA granted a selective six-month extension to the deadline of September 2019 to the 14th March 2020 (only for those that did not have APIs live at that stage). At a stroke, the implementation – already two years in the planning – was put aside by stretched teams with other urgent projects on the planning board.

As well as introducing a delay, moving the goalposts suggested the deadline was something of a moveable feast. In showing leniency, the FCA may have inadvertently given the impression that the legal requirement was more of a serving suggestion than a clear instruction. Naturally, some banks took a slacker approach to API than was in their customers’ best interests. Many still have open tickets to be resolved at the moment with fluid deadlines for correction.

Some of the banks, of which the CMA9 are included, are relying on MCI (screen scraping) technologies instead of APIs despite the deadline and an extension to the deadline having now passed. In addition, TPPs like Moneyhub are having to adapt their own data infrastructure to accommodate customers whose banks have not satisfied the FCA requirement

Why does having an API matter?

Those banks have run their projects too close to the line and failed to deliver products that are fit for purpose. 

One of the very best measures of efficacy in data sharing is ‘Time to Consent’, the number of seconds it takes to return a request for secure customer data. The speeds are averaged over a three-month period and use standard statistical analysis to iron out irregularities.

And there is good news for CMA9, some of which – such as Nationwide Building Society (42 seconds) – beat challenger bank Monzo (47 seconds). That’s not as good as the frontrunner, mobile-only challenger Starling Bank (18 seconds), but to be applauded nonetheless.

But without the concerted effort of all the major players in Open Banking, customers are being left with a substandard offering. At Moneyhub, we believe that Open Banking presents opportunities for everyone in the financial services sector to benefit from increased transparency. While Open Banking is designed to level the playing field between CMA9 and emerging banks, it presents opportunities for all that operate in Financial Services inclusive of the large banks.

Are CMA9 banks deliberately resisting change?

Disruption has been good for big companies which embraced new technologies and devastating for those who failed to see the opportunities it presented. Open Banking is the sector’s opportunity to do what is best for its customers – increasing financial transparency, making it easier to switch when more appropriate products are available and ultimately enabling financial wellbeing.

Disruption has been good for big companies which embraced new technologies and devastating for those who failed to see the opportunities it presented. Open Banking is the sector’s opportunity to do what is best for its customers – increasing financial transparency, making it easier to switch when more appropriate products are available and ultimately enabling financial wellbeing.

It is possible to see how making customers’ data easily, quickly and securely available to other providers might not be in the best interests of established market leaders. Of course there are those suggesting CMA9 banks are deliberately dragging their heels to stymie competition from challenger banks. We feel, and indeed hope, that the reason for slow progress is more benign.

At Moneyhub, our view is that the legislative efforts of the regulator are not being taken seriously enough. Because the implementation of secure, fast APIs has been pushed down some banks’ list of priorities, customers are not being put first. HSBC (which services the popular John Lewis partnership card) will be using screen-scraping after missing the deadline, Lloyds similarly has not been able to meet the deadline when providing the St James’s Place cash account.  This really isn’t good enough. Our industry is better than this.

Open Banking is the future of not just banking, but an array of financial services in a truly digital era. As I have said, it is human nature, and therefore business nature, to put non-urgent matters to one side. Yet, we live in a fast-moving world where putting customers first is paramount. Those who fail to get in line face a fate worse than the FCA’s anger; they will incur the wrath of their customers.

And we all know what happens then.

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What does Visa’s $5.3bn acquisition of Plaid mean for the future of Open Finance?

Column inches and water cooler talk of Visa’s agreement to buy US-based AISP/PISP Plaid for $5.3bn have focused on the company’s valuation in the sale (double its final private valuation) and what the deal means for its buyer’s plans. But discussion of the wider context – of what this acquisition means for the future of Open Finance – has been scarcer.

As a company with Open Banking baked into our DNA, we have never doubted that transparency and ease would be revolutionary for the financial services sector, enabling creativity and flexibility in the market and restoring consumer trust and control. Moneyhub has invested hugely in building technologies that support and further these ideals. The value of the Plaid acquisition tells us what we already knew: Open Banking’s position as the future of financial services is now beyond question. And Open Finance – the extension of Open Banking into pensions, insurance, loyalty programmes, investments and employee benefits – is its natural heir.

Visa is right to want to position itself in the Open Banking model, and right to want to harness the value and power of financial data. Given the potential upside, it is also right to place a high premium on its entry into the market. And its timing is also telling. Open Banking can no longer be seen as a vague and pleasant notion designed to friendify the financial industry, nor a perceived direction of travel for the sector. Open Banking, and by extension Open Finance, are real, here and happening now.

Up to this point, the shift has been tectonic – slow, definite, permanent – but Open Finance is now a mainstream concept within the financial services sector, and has started to broaden its reach into businesses who want to engage with their employees (Moneyhub is working with a number of employee benefits consultancies to help with this endeavour). The possibilities for the future, as Visa must know, are endless.

It is a truism of the digital age that data is the new oil. Our commitment to Open Finance lies in the belief that a deep-level understanding of consumer data will lead to greater innovation in the financial services sector. In fact, it already has. Moneyhub’s technology has demonstrated the power to shape a generation of businesses which put the consumer’s best interests in their top-line strategy, and reap the rewards of investing in a new era of financial wellness. Those businesses that have successfully integrated with our tech stack, giving themselves access to unrivalled data assets, are at the forefront of this new default mode of operation for financial services. The high value of Visa’s acquisition point for Plaid should come as no surprise given the transformative potential for Account Information Service Providers (AISPs) and Payment Initiation Services Providers (PISPs). Moneyhub, like Plaid, is both.

Moneyhub is a pioneer in Open Finance. We were the first to offer machine learning for our data categorisation engine and first to offer innovative highly personalised ‘smart nudges’ to let customers know how and when better products and services may be appropriate, empowering smarter financial decision-making and planning. And our exclusive data partnerships and affiliate partners give Moneyhub more financial insight to pass on to our partners’ customers.

Visa’s headline-grabbing investment in Open Finance should act as a beacon to the financial services sector – indeed to the wider world – that data is critical to the future health of its businesses and to the future financial wellbeing of its customers. Flexibility, ease of use and security are shared touchpoints of both our partners and their customers. The idea that these tenets could be ignored in favour of a continued reliance on old-world more traditional methods has been blown into the weeds as a stalwart of payment processing firmly pins its colours to the mast of a future in which fintech companies transform the financial landscape for the better.

Source https://www.ft.com/content/75c80e60-364f-11ea-a6d3-9a26f8c3cba4

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Must-attend events to stay on top of the latest in Fintech

With advances in AI, cryptocurrency and robo-advising - just to name a few - the financial service space is changing faster than ever before. Events are an integral part of keeping up to date with the ever quickening pace of technological change in the sector. Today, some of the biggest Fintech events are held in London - Europe’s leading fintech hub and home to some of the most innovative fintech companies. We’ve compiled a list of the 10 most anticipated Fintech events in the next year so that you can hear from leading innovators and technologists in the sector and follow the latest tech trends that are revolutionizing financials services. 

Lendit Fintech Europe 2019 

26-27 September, London

With over 1,200 fintechs, banks and investors attending, Lendit is a leading event in financial services innovation. This September, 50 panel sessions organised into 4 main themes - digital banking, lending innovation, cutting edge Fintech, and Spendt and Lendit - will explore how lending and banking are converging, and anticipate how Fintech makes its next leap into the future. Also, on a mission to enable more meaningful connections for women in Fintech, we were particularly pleased to see the conference reserve 50 tickets for emerging women in fintech and dedicate half a day to its Women in Fintech Programme.

Platforum ID: the investment distribution conference 

2 October, London 

We will be joining over 150 experts steering retail investment distribution for a day of dynamic and engaging insight and networking opportunities. Platforum ID is the only conference run by investment distribution experts, for investment distribution experts, and is a great opportunity to hear from professionals working at all points - from manufacturer to end consumer. Asset managers' margins are under pressure from many directions: regulators, low-cost competitors and the Brexit process, and never before has it been so important for us to get together and look out for these dangers and seek out opportunities for the future. 

Connect Forum London 2019

3 October, London 

Calastone joins together with Funds Europe to present their 2019 industry research ‘The Changing Face of Funds Distribution’. There will be several guest speakers and a panel discussion which will explore changing investor needs, technological innovation on the horizon and insights into the new generation of investors. Not to be missed!

World Fintech Leadership Summer 2019

9-10 October, London 

This summit brings together key players and leading experts from the global FinTech and banking industry to discuss how new technologies are shaping the future of global banking. With delegates ranging from fintech and open banking experts, start-up and scale-up leaders interested in meeting the right people, advisors, and regulators looking to educate markets and engage with Fintech and alternative finance options, this interactive networking summit is a unique platform to share insight and perspectives on financial technology and its impact on global finance.

Defined Contribution Indaba

22 October, London 

 Indaba - meaning ‘business’ or ‘matter’ in the Zulu language - this event will bring together some of the industry’s biggest influences to cover key asset classes and investment opportunities, specifically tailored for defined contribution pension funds. We are pleased to announce our CEO, Sam Seaton, will be speaking on how recent changes to the pension system have impacted engagement in pension saving and will explore the role of Open Banking in delivering a better financial future. 

Fintech World Forum 2019

18-19 November, London 

Lasting 2 days, Fintech World Forum 2019 will cover a diverse range of topics such as AI and the future of the Fintech sector, blockchain’s impact on the fintech market, the open banking era, emerging opportunities in payments and lending, insurtech, biometrics and cryptos, as well as the need for the fintech revolution to create products with the customer and build trust in the financial industry. It is a great chance to connect with those leading the revolution and be inspired by panelists from MasterCard, ING Bank, Microsoft, IBM and many more. 

Fintech Talents 

11-13 Nov Fintech Talents 

Fintech Talents is the ultimate  fintech festival with three days of innovation, collaboration, live tech demos, workshops, live music and more. It promises networking opportunities with leading innovators who are transforming financial services and a chance to pitch to tech leads looking to meet ground-braking solution provides. This is a great opportunity to dig deep into innovation and explore the cutting edge tech and business trends revolutionising the sector!

Fintech Connect 2019

3-4 December, London 

This is one of the UK’s leading Fintech conference and exhibition. The 2019 event held in London will bring together over 6,000 of the fintech community as they seek out the latest innovations on the market. Major financial institutions will share best practice and showcase the new products and solutions shaping financial services of the future. This is a fantastic chance to make new industry connections - we particularly like the chance to arrange onsite meetings via the Fintech Connect app. 

Artificial intelligence in financial services 2020

4-5 February, London 

Do you want to know more about the role of AI in the financial sector? And how you can leverage new tools for the best effect? This event brings together over 200 CEOs from leading financial institutions to answers these questions. The event promises networking opportunities, a chance to learn new perspectives and the up-to-date knowledge to help you to strategise for the future. 

London Fintech Week

8-9 July, London 

Not to forget, London Fintech Week. This will be an opportunity to connect with those leading the way for Fintech and discover the most disruptive trends of 2020. This summer, themes centred around the future of tech in Financial Services and how Fintech is accelerating our journey to a new global world. The event also hosted an evening for Women in Blockchain dedicated to encouraging women into the space. 2020 promises even more with 2000s attendees, 80 speakers and 40 industry leaders exhibiting. 

This is an exciting time for the Fintech sector and it is great to see London is hosting some of the best Fintech events Europe has to offer. This is not an exhaustive list - and there are some great Fintech conferences and networking opportunities to look out for internationally - but it gives you a good idea of what is going on right on our doorstep. 

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The role of screen scraping and the Open Banking journey

Open Banking has already had a significant impact in terms of unlocking the market to make way for new blood. Where traditional banks historically held the monopoly over customer account information, the regulatory drive towards a (consumer consent based) data-sharing ecosystem has enabled a plethora of start-ups to innovate the delivery of financial services.

While the primary aim of PSD2 legislation may have been to foster innovation and level the playing field, it comes at a time where customer expectations of technology are higher than ever. Deep in the digital age, the tone has been set by trend-setters across all industries that if we can use tech to make consumers’ lives easier, we should.  In fact, according to research from the Open Data Institute (ODI), 64% of UK consumers would share more personal data in return for new benefits that are more convenient. 

The new wave of financial services products we’re seeing is underpinned by data aggregation and the categorisation of all transactions within it, whereby FinTech firms are granted access to transactional data across their users’ bank accounts in order to broaden the scope of their digital offering. Until recently, a technique known as ‘screen scraping’ has been the primary method of assembling this data. Screen scraping has undoubtedly delivered a valuable service to many, but the possibilities now available through Open Banking are truly game changing. 

The UK Competition and Markets Authority (CMA) compelled all major UK banks to make customer current account transaction data available via API in January 2018 with the customer’s permission.  On September 14th a further milestone will be reached with all transactional (payment) accounts being subject to this change through PSD2 legislation for the EU taking place. In addition, the API made available by law must use secure customer authentication (SCA) during login. This change will quite simply make screen scraping for all payment accounts impossible. PSD2 legislation makes it illegal to access payment transaction data via screen scraping for payment accounts from 13th March 2020, even if still technically possible.  

The impact of Open Banking for the end consumer?

Open Banking was the next logical step towards finally breaking the banks’ monopoly on customer data. Complimenting GDPR and breaking the stronghold of incumbent banks, the initiative aims to level the playing field for new entrants and create an ecosystem in which consumer financial information flows seamlessly between different institutions with authorisation from and control directly by the customer.

For the consumer, Open Banking marks the start of a new relationship with the financial services industry based on trust, transparency and consent. By enabling them to share their data securely, Open Banking means they can easily evaluate personalised financial products and manage their own finances across several accounts without having to go through their bank, truly empowering the individual.

Does screen scraping still have a place?

With roughly 75% of organisations developing both internal and public-facing APIs and legislation encouraging this route as the industry standard, it’s clear API integration is the future. However, until we achieve full Open Data via API's, screen scraping is still required to view a customer’s full financial picture, as not all financial accounts are yet required to offer API access. We should also note, that the process of screen scraping (in a read-only format) is widely acknowledged as a ‘safe’ process, when done by an organisation that takes data security seriously and has the customer’s best interests at heart. It has been common practice since the 80’s by many financial institutions from credit bureaus, news organisations to the banks themselves in order to streamline processes involving legacy systems and to minimise the need for re-keying data.

Markets such as pensions and investments have no obligation to make data available by API anytime soon. Whilst some providers are embracing change, and proactively implementing API’s anyway, others are not. In the short term at least, offering a combination of direct open banking API’s and screen scraping for accounts where this is not an option, gives customers the most optimal solution to see all their finances in one place. 

Moneyhub is, at its core, an Open Banking platform. Not only was our API one of the first live Open Banking integration, but our technology features the most data links of any aggregation provider in the UK.

We have invested considerable time and money in direct API Open Banking integration to deliver innovative, secure banking services to our users, and benefits beyond just data such as auto-categorisation and insights via personalised smart nudges. Certainly at this stage, however, coverage of all accounts depends on both API integration and screen scraping to deliver this seamless, holistic service. In light of this, we have established a triage system to find the best source of data when an account is connected.  Starting with direct Open Banking API’s, then bespoke API’s that are available and implemented through to Screen Scraping when necessary. In addition to our account triage system we also have a set of migration tools in place to support the move from screen scraping to Open Banking API’s and more broadly Open Data API’s as and when these become available. 

In the short-term, screen scraping will continue to be a workaround in the absence of available APIs – but it won’t be long until this method is a thing of the past.

With the end goal of opening a closed market and ultimately empowering customers the importance of any system has got to be about Trust, Transparency and Consent.  The days of arguing about who owns the customers data are well behind us. The customer owns their data - every last transaction of it.

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Moneyhub Q&A - L&G Magazine

Samantha Seaton gives L&G magazine round up of how Moneyhub is disrupting the financial sector. Including insights on how the app is benefiting lenders and borrowers as well as how innovations in tech, such as 5G, will take the app to the next level. Asked what the future looks like, Moneyhub aims to unlock the power of Open Data and transform the way customers interact with financial data - truly maximising financial literacy nationwide.

What is Moneyhub?

Moneyhub is a truly unique financial management platform, deployed by companies in their digital propositions (directly as a white-labelled solution or embedded via APIs) enabling an entirely new level of personalisation and customer interaction. 

As pioneers of Open Banking, the Moneyhub platform offers the most data links of any aggregation provider in the UK. Giving easy, consolidated access to credit cards, loans, bank accounts, mortgages, investments, pensions, SIPPs, ISAs for the end user. 

Through AI, the platform will analyse an individual’s data and offer personalised ‘smart nudges’ to improve financial wellbeing. Standard nudges can be included or excluded on implementation by the company providing the solution, or bespoke nudges that are more tailored to the particular relationship they have with the individual can also be accommodated.  

Moreover, by automating simple administration tasks like alerting when a loan-to-value threshold has been crossed on a mortgage, through to complex machine learning insights, Moneyhub removes the time and effort required to achieve optimal financial management.

Culminating with Moneyhub’s Payment Gateway to make nudges immediately actionable means a 40% increase on take up. All at a fraction of the cost of legacy payment methods such as Visa, Paypal and Stripe. 

What are the greatest opportunities for borrowers and lenders using a platform like Moneyhub?

Lenders can benefit hugely from including a platform like Moneyhub in their proposition. It automates data capture and gives greater and more accurate insight into the spending patterns of their customers. Lending is no longer binary with a yes or no decision, a third option can easily be presented to help customers not yet meeting the lending criteria. 

For borrowers, the platform enables them to be smarter about their finances and make more informed choices when it comes to spending and borrowing. 

How do you see the generational gap affecting take up of mobile financial solutions?

In the digital age, consumer expectations are for smarter technology making it easier to achieve their goals.  

With mobile financial solutions being utilised across the ages, it is the level of expectation from money platforms that divides the generations the most. Where millennials expect technology to present clear but highly personalised options, the older generation want to understand the reasoning behind any recommendations. In all cases the demand for speed, efficiency and seamlessness is increasing. One key difference is in the device that different generations use to manage their money, be it their mobile phone, browser, or tablet, so it is important to be agnostic and let people choose.

With effortless money management it is now possible to prepare for a sustainable financial future from an early age. It is equally attractive in later life when managing finances in retirement.  

Even those that don’t directly embrace technology, and particularly vulnerable individuals, will benefit and be protected via Moneyhub Connect and chosen friends, family, advisers and solicitors.  

And from a business perspective, the opportunity to engage with customers across generations and income thresholds is maximised by financial technology.   

What will 5G and other innovations in communications make possible?

Knowing the next best thing to do with money and automating the action required will see consumers better off. Open Banking will become Open Data. This means the consumer will be in complete control of all their data encompassing pensions, insurance, medical, property, qualifications, driving profile and so forth. The result will be data working for the consumer to help them achieve their goals and improve their overall wellbeing.  

Measuring how often people interact with our digital propositions will be a thing of the past. Outcomes will be the measure of success. 

What are your aspirations for the future?

Moneyhub is a people first financial management platform designed to improve financial wellness by empowering individuals while providing businesses with insights that unlock growth. By championing the consent-based sharing of consumers’ financial data, we are seeing the maximisation of financial wellbeing across our client’s customers and employees.

Our goal is to unlock the power of Open Data and transform the way customers interact with financial data. By helping lenders and borrowers alike, we want to create a more sustainable and stable financial world. 

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