The biggest transformations in payments have so far been regulatory-driven, according to Imran Gulamhuseinwala, trustee of the Open Banking Implementation Entity (OBIE). And the latest breakthrough has come from a recent decision by the Competition and Markets Authority (CMA) to make the nine largest banks implement the same mechanism for transferring money across accounts by January 2022.
This is the last major piece of functionality to be delivered under the Open Banking remedy, which was established in 2016 following a report by the CMA which found that older, larger banks didn’t have to compete hard enough to gain customers’ business, while newer banks found it difficult to access the market and grow.
Without going into the technicalities, this ruling lays down the plumbing to allow automatic transfers. It is currently applied to sweeping – moving money into higher earning interest accounts at the end of the day – and Gulamhuseinwala says it will be the basis for smarter finance. It also gives customers instant access to higher earning interest accounts.