Impact Of Shifting To Open Banking Assignment Sample

Introduction Of The Impact Of Shifting To Open Banking In The Banking Sector Of The U.K

In this assessment of the impacts of shifting of the banking system into open banking, various changes are observed in the financial and accounting activities that can create a ripple effect among the customers. Through the process of shifting from traditional banking to open banking there is easier access to data is observed. Through this process, the better management of finance and Third-party data could be managed effectively for the instant settlement of transactions. At some points, it increases equality, by bridging the gap between financial institutions and financial services providers in accessing some types of data and information.

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This project is promising at a high level. As it enhances competition in the financial sector to provide competitive rates for start-up businesses. In addition, it empowers developers to build frameworks and systems to set standards for data sharing with third parties.

It provides an opportunity for financial institutions, investors, and developers to research this sector for further data sharing across other sectors and markets. Consumer protection remains central in the banking sector, but users of data have limited interest at this stage in putting a clear boundary for data sharing. Let's say that regulators have the role of developing the status quo, and fair vision, and demand far greater transparency and control.

Research Background

In the analysis of the changing impacts of open banking, there are various reports have been created on the usage of financial services for the steady and rapid growth of the market. research on the allied market on the impacts of open banking, has reported and predicted growth of 24.4 %, which is around 43 billion dollars by the year 2026 (Long,2020). The First screen test of open banking was conducted in the 1980s by the federal post office of Germany. After the emergence and authentication of the banking security system, the rise of the directive payment service system is observed. The growth of the Fintech industry and financial institutions has permitted non-banks to engage in the integration of payment initiatives to build and utilize the opportunities and capabilities of efficient financial transactions (Wewege, 2020). In 2018, the PSD2 impacted the banking system and also authorized third parties in authoritarian of data access and to create innovative solutions to financial issues.

Research Hypothesis

In the analysis of the impacts of open banking, there are variations in performance expectancy and various predominant factors of the adaptation of job performance are observed to be instigated which will be justifiable in the transactional performance and for the obtaining the benefits of the recommended financial position of the open banking (Westermeier,2020). These hypothesize are

H1: The expectancy of the performance will positively influence the Interaction of open banking

H0: The performance expectancy of the influence will not impact positively the open banking

H2: The risk negativity of the influences will impact the intentions of open banking.

H0: The Negativity of the risk factors will not impact the intentions of open banking.

H3: The effort expectancy and the performance expectancy will positively affect risk management

H0: The performance expectancy & effort expectancy will not positively influence in effective risk management.

H4: Social Influence and Usage of Intentions for the effective adaptation of the open banking

H0 Social Influence and use of intentions will not be implicated in the effective adaptation of the assessment of Open Banking.

Research Question

In the analysis of the impacts of shifting to online banking from traditional banking from the perspective of the Banking system of the United Kingdom. There are various implications of the banking standards instigated according to the financial data of the larger banking sector companies in the United Kingdom (Joshi, 2020). There are also other banking systems in other developed countries that are variating in the serving of services of opening Banking. These questions are

Q1. Is open banking essential for a developed economy?

Q1.1 Is performance expectancy and social influence of intentions implicated in the Banking service of the Saudi Arabian Banking system like the U.K. banking system?

Q1.2 Is Open banking positively influencing social interactions & helpful in the reduction of financial Risk factors?

Literature Review

In the analysis of the impacts of Open Banking from the perspective of the U.K. banking system, there are various aspects that aimed for the betterment of the improvement and development of the CMA or the competition and small Markets authorities.

According to the author, Croxson 2021, there are various technologies and regulations which are initiated in the Application Programming Interfaces, which are reported by around 100 regulated providers (Croxson, 2021). The benefits of the instigation of open banking are that it is a secure and instant way of sharing financial pieces of information and could also assess the transactions effectively which is crucial for global financial services and also for the banking system of the United Kingdom. Through the instigation of open banking in the traditional banking sector of the U.K., the usage of this system is observed at 13.9 million in October 2021. Through this process, effective money management could be assessed. The emergence of new technologies and players along with a favorable regulatory framework (PSD2 Directive) is changing the banking industry", like the emergence of Fintechs an TechFins which "have changed the way customers interact to satisfy their financial needs." Confirming that the market is "constantly evolving" towards "increasing the user's experience to developing a time to market framework for banks to innovate products, processes, and channels, increasing the cost efficiency and looking for a partnering on order”. The changes have been adopted following recent updates in the the European Union's revised Payment Services Directive (PSD 2), “which aims at opening up the market for payment services in the EU. Banks are required to grant other providers access to their customers' payment account data in order to stimulate competition”. Future market constructs and associated APIs needed to support a burgeoning ecosystem are proposed and elaborated. Barriers to their development and the realization of a fully functioning open banking ecosystem are also discussed.

Figure 1: Chart of the number of open banking users in the United Kingdom

(Source: www.statista.com)

According to the annual report of Plaid, 2021, the effect of rising the fintech industry has impacted around 86% of the customers in the U.K. banking services. There are around 42% of the U.K. customer have adopted efficient open banking technology for effective money management & gathering money-saving benefits which have helped in the survival of the pandemic crisis (Openbanking.org.uk, 2023). With this adaptation of the open banking system, the fintech firms have gathered around 11 billion pounds in revenue, which is around 8% of U.K's total financial output from the services sectors. The UK has a highly centralized, concentrated banking system with weak relationships between banks and their borrowers." suggests "Decentralized banking systems should be structured and organized for the regulatory arrangements that are conducive to their satisfactory functioning and avoidance of pitfalls" or potential risks at the industry and economy level. The recent EU and UK directives to shift towards Open Banking, it might be in response to global competition with a decentralized framework called blockchain-based identity management and access control (BIMAC) framework to integrate the advantages of traditional banking and blockchain technology to solve the challenges. Open Banking has captured the attention of regulators globally, with many countries exploring how such programs might be pursued. Implementation must be measured against the existing statutory objectives and mandates of the regulating body tasked with an Open Banking intervention; namely Competition, Market Integrity, and Consumer Protection objectives.

Continues, that “Challenges that arise in implementation include setting key technical and user standards; ?determining minimally viable operational guidelines; deciding upon which authorized entities can participate; ensuring consumer protection and dispute resolution; and effective monitoring of new API protocols.

Figure 2: Chart of the net profit of open banking in leading Banks in the United Kingdom

(Source: www.statista.com)

Research Methods

Data Collection & Analysis

This analysis of the impacts of Open Banking is a representation of the U.K. banking system. There is the development of Open Banking, which has effectively developed the fintech infrastructure and progressed the legislation for deploying the principles in different sectors for the reformation of transactions. As a developed country, the banking system of the U.K. should and will have an ambition that gives a detailed understanding of the wider perspective of future accounting activities.

Sampling Technique

Through the designing of a survey that is self -self-administered on the online platforms, around 4000 customers have given their feedback on the cost-effectiveness. Through the secondary data collection, the accuracy and efficiency of the data will be used in the user-friendliness of the conduction of the survey. According to the population variation of the United Kingdom, the usage of the Internet and smartphones is used in the displaying of questions and creating a questionnaire. There is also software that could segregate the data and also could increase the data accuracy.

Summary

In the summarization of the impacts of Open Banking in the U.K. banking sector, it is observed that engagement with online transaction platforms has severely increased after the pandemic period. There are potential opportunities and fulfilment of concerns that are creating some issues like data inaccuracy and other data processing issues. The implication of innovative financial solutions and the implication of the fintech tech technologies like open banking could help in the betterment of the online transaction trends in the U.K. population.

References

Book

• Croxson, (2021) Platform-based business models and financial inclusion available at www.sipotra.it/wp-content/uploads/2022/03/Platform-based-business-models-and-financial-inclusion.pdf [Accessed on 9.5.2023]

Journals

• Long, G., Tan, Y., Jiang, J. and Zhang, C., 2020. Federated learning for open banking. InFederated Learning: Privacy and Incentive(pp. 240-254). Cham: Springer International Publishing.
• Wewege, L., Lee, J. and Thomsett, M.C., 2020. Disruptions and digital banking trends.Journal of Applied Finance and Banking,10(6), pp.15-56.
• Westermeier, C., 2020. Money is data–the platformization of financial transactions.Information, Communication & Society,23(14), pp.2047-2063.

Article

• Joshi, (2020) Does Public Country-by-Country Reporting Deter Tax Avoidance and Income Shifting? Evidence from the European Banking Industry^* available at onlinelibrary.wiley.com/doi/abs/10.1111/1911-3846.12601 [Accessed on 9.5.2023]

Website

• Openbanking.org.uk/, (2023) Shifting from open banking to open finance available at www. Openbanking.org.uk/ [Accessed on 9.5.2023]