HSBC to trial 'open banking' platform that isn't really open
HSBC have announced they're to begin trialling their opening banking platform, which will enable customers to view all of their bank accounts - even with other banks - in one place.
Currently known as HSBC Beta, the app-based platform will be tested on 10,000 customers from the end of October, before being succeeded by a similar app that will be made available throughout the UK in "early 2018".
Aside from allowing customers to see all their transactions with every bank they have an account with, HSBC Beta will also come with a variety of features helping them to budget more effectively and save money.
And while this would suggest that the banking industry has taken its first step towards introducing the kind of unified data sharing platform outlined by the Competition and Markets Authority (CMA) in 2016, HSBC Beta won't allow other banks and third parties to contact customers through it.
Much of the impetus for HSBC Beta comes from the aforementioned CMA, who in May of last year outlined plans to make the retail banking market more competitive.
Aside from proposing a voluntary cap on unauthorised overdrafts, their report into the market outlined a "single open standard data sharing platform", which together with other reforms would reportedly save customers £1 billion over five years.
Such a platform would make the relevant account info of customers available to every bank in the UK, as well as to other third parties, so that these could contact people with offers of superior financial products (such as current accounts with better interest rates).
Well, now it would seem that the banking industry is actually beginning to take steps to make such a platform a reality, with HSBC announcing their own open platform.
Through it, customers can add information from up to 21 different banks, including Barclays, Lloyds and Santander. Added to this, they can see info on not only their current accounts with such banks, but also their other financial products, such as loans and mortgages.
Yet this is only the tip of the iceberg, since by combining all of a customer's accounts in one space, HSBC Beta enables the customer to take a firmer handle on their budget and finances.
In particular, the platform comes with a variety of features that facilitate greater and more effective budgeting, including the following:
- Safe Balance - tells customer how much disposable money they have available (in all their accounts) before next payday
- Spend Analysis - categorises transactions and analyses spending patterns so as to identify areas of particular expense
- Digital Coach - offers guidance on how to spend and save more prudently
- Goals - enables customer to create spending goals and offers advice on how to reach them
- Savings Rules - an app that helps people save by rounding up purchases to nearest pound and putting the difference in their savings account
It's worth noting that Savings Rules is the successor to SmartSave, an app that was trialled last year by HSBC as part of the Financial Conduct Authority's Regulatory Sandbox test programme.
By using it, their customers saved £126 on average over a two-month period, the kind of saving that could come in very handy given that the UK savings rate has recently fallen to its lowest levels since 2011.
Commenting on such advantages, HSBC's Head of Personal Banking and Advance, Becky Moffat, said, "We want to provide customers with greater control and make their lives easier. Through our Beta app we want to give our customers a complete and joined-up view of their financial life ... taking the hassle out of checking dozens of statements and manually calculating what's left".
Competition and switching
Yet while the SmartSave trial provides evidence that customers using HSBC Beta may very well improve their budgeting and saving, there's yet no evidence that the platform will do what the CMA want "open banking" to do: increase competition and switching.
That's because, so far, they're the only bank currently actively involved in the trial of the new platform.
Even though HSBC customers can see any accounts of theirs they might have with other banks, other banks won't be able to access any of the account or customer info contained in HSBC Beta.
As such, customers engaged in the trial won't ever be contacted by another bank or third party (e.g. a price comparison website) with offers of current accounts with superior terms and rates.
In light of this, it would seem that, rather than helping customers to find the best possible accounts and products, HSBC have essentially "hijacked" the concept of open banking, and replaced it with a more closed version.
That said, the Open Banking Implementation Entity (OBIE) - set up by the CMA after their investigation - are planning to make data-sharing standards available to the entire industry by January 2018.
As a result, it's possible that HSBC will make use of such standards in the successor to Beta they release next year, when perhaps customers will finally see the banking industry become a little more competitive.