“A massive opportunity”: Megan Caywood from Starling Bank talks Open Banking
Last week we were fortunate enough to sit down with Megan Caywood, Chief Platform Officer at Starling Bank and one of the driving forces in the fintech industry. We talked about Open Banking, how it helps people, and discussed the trends we should all watch out for over the coming months.
Here’s what Megan had to say…
Open Banking aims to create a more transparent and inclusive financial ecosystem for everyone, with companies like Anorak and Starling right at its centre. What is Starling doing to stay relevant in this space?
Starling Bank was the first licensed UK bank to offer Open Banking APIs and is widely seen as the leader in this space. Starling hosted the inaugural Open Banking hackathon at Google Campus in 2017 (which saw awesome companies participate in, like Anorak), and is seen across the industry as leaders in this area and as an example of best in class practices. For example, Starling is cited internally at Open Banking on how to do authentication (here is a post by the Open Banking CTO who describe why Starling’s process is a brilliant example of Open Banking in action).
In the UK, millions of families are financially unprotected if the breadwinner dies. At Anorak, it’s our mission to give all those families easy access to regulated life insurance advice. What are other top trends to watch with regard to helping people manage their financial vulnerability?
There’s a massive opportunity to help the financially vulnerable, and Open Banking in particular creates opportunities to help this segment. For example, banks generate significantly more overdraft revenue from just a small portion of their users — around 10% of customers generate between a third and a half of all contributions to profits from current accounts.
A key goal of Open Banking is to drive transparency among fees and pricing for users, including overdrafts. Open Banking will enable customers to easily see what they are paying for a service and how much they stand to save if they switch — for example, it could enable an app to integrate all of the banks APIs to compare overdraft fees.
Then, the app could show a user how much they stand to save on these fees by switching to another bank. Further, given the Current Account Switching Service which all banks have available (as per government mandate) customers can then easily switch to another bank with better pricing if they choose to do so. This is incredibly important as it drives transparency among prices to enable customers to easily understand what their paying and how much they stand to save if they switch, and then enables them to easily switch to access those benefits.
Anorak is the first insurtech company that takes advantage of Open Banking. When do you think Open Banking will fully arrive in people’s lives?
Open Banking was set to go live on 13th January 2018, but most banks did not meet this date with Open APIs and so it is now on a delayed rollout through autumn 2019. Once banks offer APIs, other companies will be able to integrate them, and in turn customers will experience the benefits.
Open Banking provides great opportunities, but it can also raise security concerns. How do you protect your customers’ data?
APIs are a secure way of sharing data, and the companies that are given access to the APIs are vetted to ensure they will treat the data in lawful and secure ways. Specifically, in order for a company to access bank APIs to even be able to ask a customer for their permission to access their data, companies must either be approved to be on the Open Banking Directory or go through a bank’s due diligence process.
The government set up the Open Banking directory with the explicit intent to ensure that the companies accessing bank data would uphold the security and integrity of the banking ecosystem. With Starling, we check a company is on this directory or alternatively have them complete the due diligence process directly with Starling — this process includes a review of their Terms of Service, Privacy Policy, Data Protection Policy, and Information Security Policy and the completion of a questionnaire. The goal of this process is to check that they’re going to treat our customer data in lawful and secure ways. For example, we confirm they aren’t going to use the data for marketing purposes, or that the data is properly encrypted.
