The UK government has asked interested parties for their thoughts on opening up application programming interfaces (APIs) to increase competition.
IT platforms such as Comparethemarket.com have transformed the process of buying insurance and the government hopes that, by opening banking APIs, technology companies can increase transparency of banking services.
The government said it is setting out its aim to create a freely accessible standard for developing software that enables customers to share their bank data with other products or services they use. This will, for example, enable them to take advantage of easier ways to pay or special offers. The idea was revealed in December 2015.
“By creating an open standard for developing APIs, the government wants to encourage more banks and finance technology firms to work together to devise new ways to use bank data that benefit customers,” said the govenment.
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City Minister Andrea Leadsom said: “Key to our long-term economic plan is making Britain the global centre for financial technology – or 'FinTech' – and innovation. Making it easier for customers to use their data in more effective or creative ways can help achieve this, and we think the benefits and opportunities for customers could be huge.
"Greater use of data could help customers by letting them know whether they could save money by moving their bank account.
"It is also about making banks work harder to win customers’ business through enabling new providers to enter the market more freely.”
The call for evidence will run for four weeks.
Regulators have tried to inject competition into the retail banking sector with a system that enables consumers to change bank accounts more easily.
Open APIs could enable companies similar to Comparethemarket.com to provide information-enrichment services. This government said this could inject choice and competition, forcing banks to invest more in technology to improve customer services. Companies such as Google and Facebook are applying for licences to offer certain banking services, but say they do not want to become banks.
Greater competition in banking is more likely if there are independent advisories pitting banks against each other, supported by easy account switching.