ESPECIALLY in a world of Brexit and President Trump, predicting what lies ahead in the next 12 months is a fool’s own errand, even in the slightly less volatile world of consumer technology. But it’s a reasonably safe bet that we will be hearing a lot more in 2018 of something called Open Banking.
It’s not a new concept but it is new to the UK. The Chancellor lit the touchpaper at last month’s budget for the rollout of a regime that will deregulate another part of the financial services industry and go some way towards shifting control of your finances away from your bank.
Under the new rules, the nine biggest current account providers will be required to let their customers share their data with other third parties, which can then analyse it and track spending patterns. Until now, such anarchy has been in breach of the standard terms and conditions.
If all your accounts are with the same bank, the benefit to you is minimal. But if, like most of us, you have current accounts, credit cards and ISAs all over the place, the advantage of being able to track them all on one screen is plain to see.
In North America, the personal finance site Mint has been amortising multiple accounts for years, and displaying their combined incomings and outgoings in easy-to-digest graphs and reports. Desktop software like Quicken, a pre-internet version of which used to be available in Britain, provides a similar service.
Here, the emerging players in 2018 will be platforms like Bean and Yolt. At the moment, they sound like probiotic drinks in the refrigerated counter at Morrisons, but the names will soon become synonymous with money. Indeed, if you - or the younger members of your family - are prone to scatterbrain tendencies when it comes to financial management, they could just change the way you bank online.
Bean and Yolt are apps you install on your phone and other devices, and supply with the login details to your current and credit card accounts. That’s the part that is newly permissible in the deregulated environment of 2018.
The apps pull in the details of your transactions from unlimited accounts and finance companies, and combine the results into a single list of credits and debits, and warn you if any scheduled payments will take you into the red.
Information that your bank formerly kept to itself will now become available to the apps, which means they will be freed to track all your regular payments, including subscriptions and household bills, and tell you if they think they can find better deals elsewhere. That, of course, is their euphemism for selling you stuff.
The security risk is minimal because the apps have read-only access to your accounts, which means they can’t move any money; they just alert you if they think you need to do so.
Open Banking represents a considerable business opportunity for new entrants to the financial sector, and for existing players such as price comparison sites to offer new-age financial management solutions under modish brand names. That’s why it’s such a safe bet as an emerging trend for the year ahead.
Their understandable concern for security notwithstanding, the UK’s banks have mostly dragged their heels in the development of online services, so it may come as a shock to them tomorrow night to discover there’s a new year’s party to which they are not invited.