First Direct is piloting a platform that enables customers to bring all their accounts with financial services firms into a single app.
The money management app, called artha, will help customers of First Direct, which is HSBC’s online bank and telephone bank, understand their spending from different providers through a single login. It will also analyse their behaviour and make recommendations.
Following the arrival of the second iteration of the EU’s Payment Services Directive (PSD2) and the Competition and Markets Authority’s (CMA’s) rules for open banking in the UK, banks have to be capable of providing third-party financial services suppliers access to customer data, if the customer agrees, through application programming interfaces (APIs).
Payments could be initiated by third-party suppliers and account information viewed through them, which would mean a third party could build services on top of an account and allow the consumer to use these rather than those offered by the bank.
Apps which allow customers to put all their financial products in one place, with complementary services using the data to help them manage finances, are seen as the initial opportunity for companies in the sector.
The six-month artha pilot, which uses technology from financial technology (fintech) firm Bud, is part of HSBC UK’s Open Banking strategy. It provides a marketplace of financial products.
Joe Gordon, head of First Direct, said: “In today’s environment, more customers are putting value on service and experiences not just products, and as such they want companies that focus on this. We believe it could make banking better, more transparent and more innovative for everyone.”
Ed Maslaveckas, co-founder at Bud, which provides the technology, said: “Open banking provides a massive opportunity for banks to engage more effectively with their customers. By demonstrating the value of industry collaboration, this kind of initiative has the potential to re-shape the financial services industry.”
Read more about PSD2 and open banking
- The government’s Competition and Markets Authority (CMA) has requested feedback on proposals to increase competition in the UK banking sector.
- The Competitions and Markets Authority opens up the banking apps market following an investigation into how to create greater competition in banking.
- With the EU’s Payment Service Directive (PSD2) going into effect in January 2018, banks have no time to waste in preparing for the changes it will bring.
Ovum analyst David Bannister said PSD2 and open banking change the nature of banking. “At the moment, you have all of your financial services roughly with one bank. You are not getting any advice from high street banks,” he said.
“The new regulation allows a whole range of advisory applications, consumer advice, offers and things like that all in one place. That changes your consumer or even small business relationship with a bank,” he added.