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Build a Better Budget by Thinking of Your Money as Someone Else’s

Photo by Chris Clogg

It’s easier to give advice than it is to take it. You tell your friend she really needs to dump that jerk, but meanwhile, you can’t break things off with your own jerk. Most of us have been there, and that dynamic rings especially true when it comes to money. According to a recent study, we may overestimate the value of our own money versus someone else’s.

New research published in the Journal of Consumer Research suggests that we place a higher value on our own purchasing power. In the study’s abstract, the researchers explain:

“Nine studies find that people believe their money has greater purchasing power than the same quantity of others’ money. Using a variety of products from socks to clocks to chocolates, we found that participants thought the same amount of money could buy more when it belonged to themselves versus others—a pattern that extended to undesirable products. Participants also believed their money—in the form of donations, taxes, fines, and fees—would help charities and governments more than others’ money.”

In one study, researchers asked subjects to guess how many different types of products they could buy with $50, from socks to paper towels to frozen pizzas. They asked another group the same question, but about someone else who had $50. In general, participants thought their own money could buy more stuff than other people’s money could. (This was even true when they were paid to get the answer right!)

It seems like a harmless enough bias, but it can be problematic when it comes to managing your money or planning for expenditures. For example, if you’re calculating how much you need for retirement, you might think your savings will take you further than it actually will, so you don’t save as much as you need to save. The study suggests another example:

“…despite knowing that their friends barely scraped by on $100 per day during a recent trip to Barcelona, vacationers might budget less for themselves—and be unpleasantly surprised to find themselves exceeding their budget.”

Simply being aware of this bias can help you look at your money more objectively, but you can also try distancing yourself from it. One trick for doing this is to imagine it as someone else’s. For example, how much would you tell a friend to budget for a trip to Barcelona? The researchers conclude, “we found that framing one’s own money as distant (versus near) reduced the self-other difference in perceived purchasing power.” If you want to manage your money more objectively, it may help to think of it as someone else’s.

Here’s How Porn Stars Manage to Have Massive Money Shots

(Getty)

(Getty)

As someone who has probably (definitely) watched porn, you’ve noticed how there’s always insane amounts of cum, right? Like, no man can realistically shoot a load that massive and get it go exactly where he wants it to. It’s just not possible. 

In case you were wondering just how porn stars manage to have such giant cum shots, you should know that it’s all fake. Seriously. According to Vice, most, if not all, of those never-ending gobs of jizz are real, and neither is the cum in cum play films, as well as creampies.

Build a Better Budget by Thinking of Your Money As Someone Else’s

Photo by Chris Clogg

It’s easier to give advice than it is to take it. You tell your friend she really needs to dump that jerk, but meanwhile, you can’t break things off with your own jerk. Most of us have been there, and that dynamic rings especially true when it comes to money. According to a recent study, we may overestimate the value of our own money versus someone else’s.

New research published in the Journal of Consumer Research suggests that we place a higher value on our own purchasing power. In the study’s abstract, the researchers explain:

“Nine studies find that people believe their money has greater purchasing power than the same quantity of others’ money. Using a variety of products from socks to clocks to chocolates, we found that participants thought the same amount of money could buy more when it belonged to themselves versus others—a pattern that extended to undesirable products. Participants also believed their money—in the form of donations, taxes, fines, and fees—would help charities and governments more than others’ money.”

In one study, researchers asked subjects to guess how many different types of products they could buy with $50, from socks to paper towels to frozen pizzas. They asked another group the same question, but about someone else who had $50. In general, participants thought their own money could buy more stuff than other people’s money could. (This was even true when they were paid to get the answer right!)

It seems like a harmless enough bias, but it can be problematic when it comes to managing your money or planning for expenditures. For example, if you’re calculating how much you need for retirement, you might think your savings will take you further than it actually will, so you don’t save as much as you need to save. The study suggests another example:

“…despite knowing that their friends barely scraped by on $100 per day during a recent trip to Barcelona, vacationers might budget less for themselves—and be unpleasantly surprised to find themselves exceeding their budget.”

Simply being aware of this bias can help you look at your money more objectively, but you can also try distancing yourself from it. One trick for doing this is to imagine it as someone else’s. For example, how much would you tell a friend to budget for a trip to Barcelona? The researchers conclude, “we found that framing one’s own money as distant (versus near) reduced the self-other difference in perceived purchasing power.” If you want to manage your money more objectively, it may help to think of it as someone else’s.

5 Ways to Manage Salary Expectations

The start of a new year often means seeking out different career opportunities and hopping from one job to another. And if there’s one major driver behind the decision to jump ship, it’s none other than salary. That’s the latest from a Glassdoor survey, which found that over one-third of companies expect more workers to quit over the next year, with salary-related dissatisfaction being the primary reason why.

If you’re looking to retain solid employees, it pays to have a smart approach to managing salary expectations. Here are a few tips to help you get started.

Professional handing over a check

IMAGE SOURCE: GETTY IMAGES.

1. Be transparent

One way to avoid upsetting workers over salary matters is to be completely open with them about what to expect moneywise. This means sitting down with employees well before the end of the year and reviewing your compensation policy clearly. Specifically, be prepared to address questions such as:

  • How does the business determine who gets raises and whose pay stays the same?
  • How are bonuses calculated?
  • How does company performance impact salaries?
  • What data or industry benchmarks does the business use to arrive at compensation figures?

These are things you should be prepared to discuss with employees throughout the year so that there are no last-minute surprises that trigger negative reactions.

2. Talk money

Another good way to properly manage salary expectations is to encourage open conversation between managers and employees about money. Your workers should feel comfortable sharing their thoughts on what they think is fair, and managers should be prepared to address that feedback and share their own methods for assigning salaries.

Furthermore, let your staff know that salary talks don’t have to be a one-time thing. Rather, let them constitute an ongoing conversation so that workers don’t feel as though the topic is taboo.

3. Stay consistent

There’s no better way to anger employees than to tell them one thing, but do another. Similarly, sending one message to one worker and a completely different message to another is an easy way to come off as dishonest. A better approach? Stay consistent with your messaging around salary.

Specifically, map out a companywide approach to determining salary, and document your methods so that you’re able to communicate a solid set of facts. This will not only help minimize confusion among employees, but help you gain their trust.

4. Map out a budget in advance

Some companies make salary decisions on the fly, but that’s a good way to tick off employees when things don’t go their way. Rather than wing it, sit down at the beginning of each fiscal year and map out a budget that dictates your options for raises, bonuses, and other means of compensation. Knowing what sort of budget you’re dealing with can help you be more open with employees about money. It can also help you maximize opportunities to reward them financially.

5. Focus on the big picture

It’s easy to get hung up on salary when you’re an employee concerned with paying the bills. But it pays to remind your workers that salary is only one piece of the compensation puzzle. There are other benefits, like bonuses, paid vacation time, 401(k) matches, and health insurance, that have monetary value, as well, and these perks should be taken into account by your employees when determining whether they feel they’re being paid fairly or not.

If there’s one major takeaway here, it’s this: Have a plan when it comes to managing expectations around salary. The more thought you put into your company’s strategy, the better your chances of not having money be a barrier to employee retention.

Manage your own MPF portfolio or miss out on the Hong Kong stock market bull run, say advisers

Hong Kong’s stock market bull run has spilled over into gains for the city’s pension funds, making winners out of savers who put their hard-earned savings in equities.

An equity fund managed by Haitong International Asset Management returned 50 per cent to investors last year, the best performer among the 481 choices in the city’s HK$780 billion (US$100 billion) Mandatory Provident Fund (MPF), which gained 20.6 per cent on average, according to Thomson Reuters Lipper’s data. Conservative money-market funds, which invested in bank deposits, were the biggest losers, with no gains in 2017.

How Haitong gained an edge over rival MPF fund managers

The bull run illustrates how important it is for investors to keep abreast of market developments and take a more aggressive approach to managing their own portfolios, investment advisers said.

“The better the markets, the more important it is for employees to manage their own MPF investment portfolio, as the returns would be very different during a market bull run,” said Elvin Yu, the principal at pension consultancy firm Goji Consulting. “Employees should be ready to take reasonable risks in their MPF investments, or else they will miss the bull run.

Hongkongers have made the smart choice overall, with 42 per cent of the MPF’s investments allocated to equity funds, according to data from the Mandatory Provident Fund Schemes Authority. That has put them in the best position to enjoy the 36 per cent gain by the city’s benchmark Hang Seng Index.

The second-best choice has been mixed-asset funds, with investments in both stocks and bonds, which returned 23 per cent last year, followed by bond funds and money-market funds.

The Hang Seng Index has more than doubled in 15 years, rising 221 per cent between 2003 and 2017.

Equity funds performed best, delivering returns of 415 per cent over that period, while money market funds returned a mere 10.9 per cent cumulatively, according to Thomson Reuters Lipper.

That means an employee who put HK$1 million into the MPF in 2003 would get HK$4.15 million at the end of last year, while another similar size portfolio in money market funds would grow to HK$1.1 million over the same period.

This shows that it pays to be aggressive, especially for younger employees, as they can enjoy a much better return than those who play it safe with guaranteed funds, bond funds and money market funds, who are the biggest losers in most years.

Opinion: Is Hong Kong’s MPFA a responsible regulator or shying away from making fundamental reforms?

“This is particularly the case for the young employees in their 20s or 30s, who are going to invest in the MPF for 30 or 40 years before they get their contribution and returns. If they put their contribution in money market funds, which is bank deposits, they are getting only very low returns. They lose the opportunities to gain from the stock market performance which may bring several times more than bank deposits,” Yu said.

“Employees who want to earn more from their MPF should really look at the portfolio to see if they have made the right investment choice.” Yu said only those close to retirement should opt for the money market funds.

The MPF scheme, launched in 2000, now provides pension coverage for 2.8 million of Hong Kong’s employees and self-employed residents.

The compulsory fund compels employers and their staff to each contribute 5 per cent of their staff salaries to a fund managed by any one of 14 service providers selected from banks, insurers and fund managers. Employees can decide how to allocate the contributions into different investments in equities, bonds or money-market products.

Still, the bull market may have run its course, and employees would be well advised to adjust their MPF portfolios, stockbrokers said.

The Hang Seng Index is unlikely to repeat last year’s performance, said Ben Kwong Man-bun, a director at brokerage firm KGI Asia. He sees the benchmark gaining between 10 per cent and 15 per cent in 2018.

“Investors should consider a diversified approach,” he said. “If they are investing in single market funds in Hong Kong or China, they could shift to Asian or global equity funds, or invest in mixed-asset funds with a higher proportion of stocks and bonds. These can reduce their risks while enabling them to still enjoy the gains from the stock markets.”

US bond funds may not do well amid expected interest rate rises, so Kwong still prefers equity funds to bond funds.

Louis Tse Ming-kwong, managing director of VC Wealth Management, said Hong Kong and global markets would still do well in the first half of this year but the second six months may see a turn of the tide.

An interest-rate rise in the US is going to add pressure to the investment markets while the Brexit negotiations around Britain leaving the EU may bring more uncertainty to the global stock markets. “Employees should be more cautious in their investment in MPF in the second half of this year,” Tse said.

Being money savvy is necessary, but not cool, say millennials

Keep abreast of significant corporate, financial and political developments around the world. Stay informed and spot emerging risks and opportunities with independent global reporting, expert commentary and analysis you can trust.

Friends since high school, their firm helps millennials manage money

In 2002, Dani Pascarella and Korrie Martinez met as students at Spanish River High School in Boca Raton. At 16, they didn’t know their friendship would prosper — or that they would start a financial education company before they were 30.

But here they are.

The two Boca Raton natives created Invibed, which makes financial planning affordable for millennials — those in their 20s and 30s. Pascarella and Martinez’s efforts have been featured in numerous publications, including CNN Money, HuffPost, Forbes, Barron’s and Yahoo Finance.

“We help by combining financial planning with education,” Pascarella said. “We don’t just tell our clients what to do, we help them to understand why they should do it.”

According to the Center for American Progress, just 13 percent of millennials believe they are “getting ahead” economically, while 64 percent feel they are “getting by” and 23 percent feel they are “falling behind.”

According to the “Report on the Economic Well-Being of U.S. Households in 2016,” just under a quarter of adults are not able to pay their current month’s bills in full, and one-third of borrowers with a certificate, or a college or technical degree are behind on paying off their education debt.


Pascarella and Martinez started Invibed so young professionals can adopt successful money management techniques through their $39 per month Wealth Coaching Program.

Clients receive daily video lessons sent to their phone, customized financial plans and one-on-one coaching.

“We cover it all: personal finance basics, credit card debt, student loans, money management, saving for goals and investing,” said Martinez, who still lives in Boca Raton.

Invibed was recently one of 12 startups accepted into NYU Steinhardt’s EdTech Accelerator powered by StartEd.

The dollar-minded duo pitched their product at Edtech Week last month. They formed relationships with companies that want to offer wealth coaching as a corporate perk to their employees, and started conversations with investors that are interested in participating.

The two women have experience with varying financial situations with their clients, some of whom reside in Palm Beach County.

The worst, Pascarella said, is encountering someone really struggling “solely because the system has failed them.”

“We have clients that were barely able to pay their bills before working with us because they were in the wrong student loan repayment plan, or didn’t know that fixed costs shouldn’t exceed 50 percent of their take-home pay,” she said.

After graduating from the University of Florida, Pascarella moved to New York to work on Wall Street. But while she was lucky to have landed a high-paying job, most of her friends were struggling with debt. Pascarella received invitations for coffee to answer her friends’ questions about money. Her compassion for their plight led her to quit her job and start Invibed.

Pascarella enlisted the help of her high school friend, Martinez, who had also attended UF and embarked on a career in writing. Together, they launched Invibed to eliminate the financial gap that exists for millennials.

“We’re bootstrapping, which means our team is small and each member wears many hats,” Martinez said. “2017 was the first year we both worked on Invibed full-time, so carrying all of the weight was definitely a struggle. The benefit though is that if you can’t hire someone to do it, you learn how to do it yourself.”

During Pascarella’s senior year at Spanish River, she was required to do a financial internship in one of her classes.

“I always had an interest in finance, but this really took my passion to the next level,” Pascarella said. “A huge part of our program’s success is the coaching component, which I’d also credit to the mentality I adopted while playing sports and serving as cheer captain at River. Plus, Korrie (Martinez) and I met our sophomore year. Invibed wouldn’t exist today if it weren’t for our combined commitment.”

As far as future plans for the company, the duo is shifting from solely offering wealth coaching to a business-to-business model. With the new format, companies can provide their employees with Invibed as a financial wellness perk that further addresses the needs of millennials.

If they could give one piece of advice to their clients?

“Start now,” Pascarella said. “The greatest asset you have is time, and even though personal finance may seem intimidating or scary, it won’t get easier if you wait.”



Teaching your kids to manage money with apps

photo



– Ava Chan, 10, and Marcus Chan, 8, displayed no hesitation in listing their least-favorite household chore.

“Laundry,” Ava said.

“Taking out the garbage,” Marcus said.

“From bringing down the laundry to undoing the dishwasher, folding their clothes, opening the shades in the morning,” mom Suzanne Chan, of Bayside, Queens, said.

Suzanne founded and runs the blog momconfessionals.com. She also assigns the laundry-carrying and trash-removing duties around the Chan household and pays cash for their completion.

“It’s pretty cool,” Marcus said.

“Allowance—because they need to start earning their keep,” Suzanne said. She just started experimenting with some apps to track chores, savings, goals, and expenditures with and for her kids, including a digital debit card for Ava.

“Every time I give her cash she loses it and it drives me nuts,” Suzanne said.

“We’ve actually used FamZoo as a tool in our family that can help her track her goals and look at that and I look forward to using some of the investment tools with her,” said Amanda Clayman, a financial wellness psychotherapist.

She watched her daughter save months’ worth of allowance to buy a tech gadget. Clayman praised the thinking behind the dozens of allowance apps as tools to teach kids how to manage their money and how every adult must do the same.

“Children need to experience handling money,” Clayman said. “Money is something that we can only learn about in part by being taught rules.”

“It’s really hard to teach kids that in this digital world,” Suzanne said.

In the Chan household, allowance instills not only financial responsibility but also independence.

“There are toys I don’t want them to have but if they earn it, I really can’t say anything about it,” Suzanne said.

“Star Wars: Battle Front II,” Marcus said.

“I tried to get a stuffed animal I really wanted,” Ava said.

Open Banking explained: What it means, when it comes in, how it …


A sign for Money Changed is seen on the border between Lifford in Ireland and Strabane, Northern Ireland, August 16, 2017.
Open
Banking is coming — and it could change the way we handle
money forever.


REUTERS/Clodagh
Kilcoyne



  • ‘Open Banking’ begins in the UK on January 13.
  • The legislation required banks to open up data on
    customers to third parties and let them execute transactions on
    customers’ behalf — if customers agree.
  • The change is meant to encourage bank account switching
    but its long-term potential could shakeup the way banking is
    done in the UK.

LONDON — An invisible, but important, change is coming to British
banking from Saturday: Open Banking. 

Regulators in Europe and the UK are ordering banks and credit
card companies to share customer data with other companies if
their customers agree. The companies will also be able to carry
out payments on a customers’ behalf.

The changes are meant to encourage switching and comparison in UK
banking but it also has the potential to fundamentally disrupt
how banks operate and make it easier for rivals to compete.

Open Banking “could fundamentally change how we manage our
money,” according to the project’s chief UK architect.

Here’s everything you need to know about Open Banking.

What is Open Banking?

At the moment, many startups wanting to access your banking data
— transaction history, direct debits etc. — ask for your banking
password and username, and then login on your behalf. Then they
use relatively unsophisticated “screen scraping” techniques to
harvest data. Some do plug directly into the banks but these are
direct deals negotiated between startups and banks.

Open Banking forces lenders to offer a digital “fire hose” of
data that any third party can use to get standardised access —
provided the startup is registered with the UK Financial Conduct
Authority (FCA) and the customer agrees to share their data. They
won’t have to negotiate deals with banks, just plug into their
digital systems and go.


Bud George Dunning CTO Ed Maslaveckas CEO
Bud
CEO Ed Maslaveckas.

Bud

“Companies have access to building blocks that they didn’t have
access to before, which is the ability to pull data or do
transactions on behalf of customers wherever that customer is,”
said Ed Maslaveckas, CEO of fintech startup Bud.

Bud is
working with HSBC to build an app based on open banking
that
will scan customer accounts to make sure they’re on the best
phone and energy tariffs — just one potential application of the
technology.

Maslaveckas told BI: “No longer does the banking experience have
to be siloed in one specific app or website, it can start to feel
like your money is actually able to serve you wherever you might
be.”

Who’s behind it?

There are two main strands to Open Banking: a piece of EU
legislation — the second payment services directive (PSD2); and
the “Open Banking” project specifically spearheaded by the UK’s
Competition and Market Authority (CMA).

Both have forced the UK’s “Big Nine” banks —Barclays, Lloyds,
Santander, RBS, HSBC, Danske, Bank of Ireland, Nationwide, and
Allied Irish Bank — to open up customer data to third parties.

Credit card companies and other payment service providers, such
as prepaid cards, will also have to share data eventually under
PSD2 rules, although the timescale here is longer.

What is it trying to achieve?

The aim of Opening Banking is to give customers greater control
over their data and to encourage account switching.


A combination of four photographs shows (top L-R) a worker silhouetted against an illuminated sign in a branch of HSBC; Two people walking out of the headquarters of the Royal Bank of Scotland; (bottom L-R) a Lloyds bank branch near St Paul's Cathedral and a customer using a Barclays ATM, in central London July 23, 2010. Regulators have been looking at how banks would withstand another recession in an exercise similar to one in the United States last year which helped restore bank sector confidence. Some 91 lenders from 20 countries have faced the so-called stress tests. In Britain HSBC, Royal Bank of Scotland, Lloyds and Barclays, are being examined.
Banks
are going to have to share data.


REUTERS/Andrew
Winning



An investigation by the UK Competition and Markets Authority in
2015
found just 3% of customers switched their banks in the last
year
, meaning many were left with accounts that were not
right for them.

By opening up account data for analysis, people will hopefully be
able to more easily compare and contrast bank accounts. Banks
must provide a live feed of all the different products they are
offering, which will help the comparison.

Imran Gulamhuseinwala OBE, a partner at accountant EY, has been
running the Open Banking Implementation Entity (OBIE), which is
charged with spearheading the project in the UK.

He said in a statement before Christmas: “This is the culmination
of a huge amount of collaborative work done by the UK’s largest
banks and building societies, the OBIE, and companies from across
the technology and financial services sectors. It’s an
extraordinary achievement which, in time, could fundamentally
change how we manage our money.”

How does it work?

The OBIE has been working with banks since 2016 to design APIs.
These are a little like standardized digital doorways that will
act as the gateway to the data stored by the banks.

Because the APIs are standardized, companies that want to access
banking data will only have to build one API interface for all
the banks, rather than build technology for each lender.

The banks will continue to safehouse all customer account data.
PSD2 requires new security standards and banks have 18 months to
develop these systems.

What does it mean for consumers?

We’re likely to see much more sophisticated comparison apps
and financial analysis services, as startups take advantage of
the detailed product data that banks publish. One banking
executive BI spoke to suggested we could soon see the financial
equivalent of Strava,
the popular fitness app that tracks and shares exercise data.


Samantha Seaton, Moneyhub
Samantha Seaton, CEO
Moneyhub.

Moneyhub

Beyond this, Samantha Seaton, the CEO of financial dashboard
Moneyhub, told Business Insider she is excited for the potential
to build totally new financial “apps” that weren’t possible
before.

“When we did the Lloyds Bank hackathon recently we were able to
get into your bank account and set up default limits so that as a
consumer if your current account gets below say £300, you can
move money from a savings account to top it up to X,” Seaton
said.

“Then when you have enough money, it moves back into your savings
account. That’s so that you never, ever go overdrawn. There’s
loads of stuff like that.”

Maslaveckas said: “The uses of open banking are so numerate. You
walk into a shop, you scan a barcode on an item, you press buy
and you walk out. That’s a new Sainsbury’s experience, a new
Tesco experience.

“That’s the kind of stuff that, while it won’t start happening on
January 13, over the next 3 to 5 years these things will start
happening.”

But Peter Myatt, the CEO of subscription management startup Bean,
said: “In terms of new products and services that will come to
market, I don’t see that many new exciting products out there.

“Companies like ours have already been saying what interesting
stuff can we do with this data? There’s not a huge number of new
and exciting models that don’t exist now that can exist with the
read-only model.”

Products like Bean may become slicker but they won’t
fundamentally change, he believes.

What does it mean for banks?

Open Banking is both a threat and an opportunity for traditional
lenders. The threat comes from the fact that they will no longer
be able to control their interaction with their customers — an
HSBC mortgage could theoretically be sold on Google, for example.
The fear is that they will be reduced to mean “dumb pipes” —
providing banking infrastructure but with profit margins eroded
to razor-thin levels as banking becomes commodified.


Moneyhub
Get
ready for more comparison and dashboard apps like
Moneyhub.

Moneyhub

The opportunity is the same as that offered to all other
businesses looking at open banking: a huge wave of new data from
rival banks could be used to build smarter, better products.

“I definitely think it allows challengers, whether challenger
banks or challenger brands, to push forward,” Maslaveckas told
BI. “Equally, it allows banks to innovate and do things they
couldn’t before because they can create new products and services
that sit outside of their ecosystem, so it’s not a tech risk.”

“A year ago, there were active blocking attempts [from banks]
because they thought they could stop it,” Myatt said. “About six
months ago that changed because they realised they couldn’t.
They’ve now tried to actively embrace it.”

Engineering Open Banking on such a tight timescale — the
government kicked off the OBIE in 2016 — has been hugely
challenging for banks dealing with a raft of other issues. Still,
one executive at a High Street lender who spoke to BI on
background said it is a “challenging but hugely opportunistic
time,” with executives hopeful that open banking could help spur
innovation internally.

What does it mean for startups?

Open Banking has the potential to improve startups’ services by
offering a reliable, rich stream of customer data.

Christoph Riech, cofounder and CEO of online small business
lender iwoca, said: “Innovative finance providers, like iwoca,
will be able to use Open Banking data, which only the banks can
currently access, to eliminate endless form filling and make
fairer credit decisions – helping small businesses and unlocking
faster economic growth.”


Peter Myatt, Bean
Peter Myatt, cofounder and
CEO of Bean.

Bean

But Bean’s Myatt says it’s not all upside for startups.

“Open Banking raises the bar and makes it harder to get access to
it [data],” he said. “Now we have to get authorised by the FCA,
we need to get a certain type of insurance, which is not cheap.”

Myatt adds: “It’s exactly the right thing to do — we should have
to be authorised by the FCA, we should have insurance that means
the customer is fully compensated. I’m 100% behind those parts of
open banking.

“We are moving from essentially a wild west to [a system of]
proper, authorised companies who are having conversations with
banks and customers to produce good products.”

Another downside is that customers will have to consent to share
their data every three months — meaning companies will
effectively have to re-win their business four times a year.

When does it start?

PSD2 comes into force in the UK on January 13, making the UK the
first country in the world to implement the idea of “open
banking.” However,
five of the nine banks involved have said they won’t meet the
deadline and have been granted an extension.

Bud is in conversation with many of the big High Street banks and
Maslaveckas argues: “Some of the delays actually show the
seriousness of this.

I really believe in three years time, when we look back, it will
have changed the landscape significantly

“A bank could throw out a bunch of APIs that are non-functioning
or not effective. The banks we deal with are very much taking
hold of the opportunity.”

Maslaveckas believes Open Banking will really start to take
effect in two to three years time, with more ambitious projects
coming in five years.

Bean’s Myatt said that many of the banks that are set to
launch some version of Open Banking on January 13 still have
kinks to iron out.

“From what I understand from those companies [working with the
APIs], it’s just not working,” he said. “If you try and
authenticate your connection and your documentation isn’t good
enough, it just physically doesn’t work.

“Realistically we should be entering another six months to a year
of private testing before it goes fully public. That’s
realistically where we’re at.”

Moneyhub’s Seaton said: “It’s not going to go viral but I’m sure
there’s a lot of people who would like it to. It is significant.
I really believe in three years time, when we look back, it will
have changed the landscape significantly.”