Competition watchdog contacts Barclays and Lloyds banks over API failures

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Barclays and Lloyds banks have been contacted by the competition watchdog after failing to comply with open banking rules regarding the provision of data to third parties via application programming interfaces (APIs).

Open banking is based on precise information made available to third parties by banks, via APIs.

The Competition and Markets Authority (CMA) wrote to the two banks about their failures. Barclays published inaccurate information 13 times and Lloyds 10 times, according to the CMA.

“Failure to provide accurate, complete and up-to-date information about products and services at all times can mean that consumers make poor decisions and therefore may choose financial products or services that are not the best fit. to their needs,” the CMA wrote.

Open banking was made possible by the European Union’s Payment Services Directive 2 (PSD2), which came into force in 2018.

PSD2 allows third parties to access customer data held by banks via APIs – if customer consent is granted – and to offer services using this information. For example, a company – with your consent – ​​can take payment directly from your account without you leaving their website. In the United Kingdom, the Open Banking Regulation is its equivalent.

The end goal was to increase competition in an industry dominated by large financial services companies. In 2016, the British Banking Association said opening up data from everyday banking transactions had the potential to revolutionize the way consumers and businesses manage their money. “Making more banking data freely available will make it easier for people to search for products that suit their needs and get the best deals,” he said.

The adoption of open banking in the UK is accelerating as fintechs and challenger banks offer attractive financial products that use open banking functionality.

Data from the nine banks reveals that more than five million people in the UK are actively using open banking, four years after being mandated by the CMA.

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