SHUTTERSTOCK / MIKECPHOTO
Show Hide image

Six of the nine biggest banks have missed the government’s Open Banking deadline

The CMA issues directions for those who missed 13th Jan deadline – delays published here

On 13th January the rollout of Open Banking - the government plan to use shared data to increase competition and deliver better customer experience to UK current account holders – began with a controlled testing period before it goes live to consumers in March. But despite having been issued with guidelines for implementation in August 2016, most of the biggest high-street banks have asked for an extension for putting in place the necessary regulation and infrastructure to enable Open Banking.

Six of the UK’s largest current account holders have now been issued with new directives and implementation dates by the Competition and Markets Authority (CMA), which marks the first step in sanctions applied to the banks by the Authority. Failing to comply with the directives, the CMA could seek a court order to force them to do so. Reluctance from the banks to jump on board could stem from potential losses in profit; the Bank of England predicted the largest lenders could lose more than £1bn by 2023.

Open Banking uses Application Programming Interfaces (APIs) to allow individuals and businesses to share their financial data with third parties. It’s expected that this will crack open the consumer banking market, increasing competition. The initiative follows findings by the Competition and Markets Authority (CMA) in 2016 that the major high-street banks do not compete hard enough for their customers. Read more about what Open Banking is here.

The trial period will go ahead with three major banks and a larger number of regulated third parties, which may include “challenger” banks such as Monzo. Participating banks will test the technology and their ability to practise Open Banking safely, and the Financial Conduct Authority (FCA) will begin publishing approved institutions on its register.

The banks that are not yet compliant are as follows:

  • Bank of Ireland
    • Delayed date for account info functionality – 3rd August 2018
    • Delayed date for payments functionality – 7th September 2018
  • Barclays
    • Delayed date for all functionality/customers – 7th February 2018
  • HSBC
    • Delayed date for payments functionality for HSBC personal current account (PCA) customers & business current account (BCA) customers – 28th February 2018
    • Delayed date for account info and payments functionality for First Direct and M&S Bank PCA customers – 30th April 2018
  • RBS
    • Delayed date for BCA customers who use the RBS Bankline platform – 12th February 2018
  • Santander
    • Delayed date for ~40k Cater Allen BCA customers – January 2019
    • Delayed date for ~12k Santander corporate banking platform BCA customers – 7th May 2018
  • Nationwide Building Society
    • Delayed date for account info functionality for PCA customers – 21st February 2018
    • Delayed date for payments functionality for PCA customers – 28th February 2018

The Open Banking Implementation Entity (OBIE) is funded by the nine largest current account providers on the instruction of the CMA. Imran Gulamhuseinwala, Trustee of the OBIE, said the rollout was “a major step towards giving the customer real ownership and control of their finances and data.”

“The UK is the first nation in the world to launch Open Banking and many other countries are looking to our example. We should be immensely proud to be leading the revolution in retail and business banking because it means that UK customers will have more choice about how they manage and move their money.”

The 13th January was also the deadline for implementing the Second Payment Services Directive (PSD2) issued by the EU, which overlaps with Open Banking and allows customers to pay directly from their accounts, circumventing third parties such as Visa. Read more about PSD2 here. 

Augusta Riddy is a Special Projects Writer at the New Statesman.  

Show Hide image

This billion-dollar startup aims to reprogramme government itself

The co-founders of Improbable, Herman Narula and Rob Whitehead, explain why virtual worlds are technology's next big earthquake

We stand on the wooden deck of a ship, staring out at a sea of clouds. A school of flying manta-ray creatures drifts past. In the distance, islands hang in the sky.

“That isn’t background,” says Herman Narula, gesturing to the distant horizon in the video game, Worlds Adrift, which we’re looking at. “Those rocks in the distance are places you can go to. You can go to all of these places - there is no painted background.”

This, says Narula, is the fundamental difference between this new game and every other video game ever made. Every game made prior to Worlds Adrift offered “the illusion of a world; this is an actual world.”

This is what makes Improbable, the London-based startup company founded by Narula five years ago from his parents’ house while he was still at university, now worth over a billion dollars: it offers the means to make actual worlds.

 

The million-player game

 

The technology developed by Narula, his co-founder Rob Whitehead and his team at Improbable has been widely misrepresented in the rush to explain why a small startup was able to secure second-round funding of $502m, without handing over control of the company. The BBC, the Guardian and others have described Improbable as a ‘virtual reality’ company, but this is simplistic and misleading. Improbable’s product is not a game or a headset, but an operating system. In the same way that Microsoft makes Windows and software developers write games and applications that run on Windows, Improbable makes a platform called SpatialOS, upon which new kinds of games are being built. The difference is that each installation of Windows – or any other operating system, such as the iOS software that runs on every iPhone – runs on a single computer. SpatialOS runs on thousands of computers, all at the same time. Improbable’s technology is distributed computing, and Narula believes it will be even more influential in our future than the Windows PC or the iPhone have been in our past.

People describe Improbable as a virtual reality company because this is what SpatialOS enables people to make. By bringing together thousands of machines into a distributed supercomputer, it provides software developers with the means to create huge virtual worlds that can be inhabited by many thousands of people at the same time.

The first industry that Improbable aims to transform is the gaming industry, the biggest and fastest-growing of the entertainment media. The biggest event in online gaming so far took place in a game called Eve Online. Over 21 hours on a Monday in 2014, a conflict over a space station escalated into an all-or-nothing showdown between the game’s warring factions. At its peak, more than 2,500 players joined a single map. The game had to run ten times slower than usual to accommodate the number of players present. For SpatialOS, this number of simultaneous interactions would represent a normal day in a small virtual world. Despite the large number of players currently enjoying the early preview of Worlds Adrift – Narula says there are “thousands” – the developers are currently limiting the size of the world they’re playing in, to give them any chance of bumping into one another.

“When you play World of Warcraft,” explains Narula, “you’re not really in a single world. You’re in thousands of copies of the same world, and those copies are all static. They never change, nothing you do in the world ever creates a lasting impact. So the kind of engagement you can have involves going through a linear story, like in a single-player game, but you have other people around that can help you with it.” Worlds Adrift, on the other hand, “is a single world the size of Wales, with millions of simulated entities inside it. And every action any player takes in the world permanently impacts the world in a way that then creates effects that other people encounter.”

“It has cartographers,” adds Rob Whitehead.  There is a cadence to the way Improbable’s two co-founders talk. Narula’s speech is very fast but also very detailed and composed, as if he is reading as quickly as possible from an internal textbook. Whitehead says less, dropping in observations that Narula quickly elaborates upon, but in speaking to either there is the same sense of chatty yet formidable intelligence. At one point in our conversation Whitehead makes a comment about the Mandelbrot set, and from his expression it is clear that he assumes everyone in the room knows what he is talking about.

“Yeah, cartographers,” continues Narula. “There are people on the internet, flying around this world with compasses and wind speed, to try to create maps of how big this world is.”

Narula is eager to stress that this is not an incremental development in games programming. He describes the difference as “binary”; “you’re either running on one server or on a massive distributed cluster. If you’re running on a massive distributed cluster, thousands of new things are possible. The endgame for this company, what we’re trying to build and to make happen, is literally to create new realities.”

It is at this point that Narula’s mountainous ambitions loom into view. He talks about upscaling “from thousands of machines to millions of machines, to datacentres that are located near population centres, to the point where we can have low-latency, massive interactions that are happening with millions of people.”

If the idea of a million people playing a game at once sounds unlikely, consider that this would amount to 0.05 per cent of Facebook’s current membership.           

 
New nations


On 27 June, Facebook announced that its membership has now exceeded two billion people. If Facebook was a country it would be by far the most populous nation on Earth, with a population more than six times that of the United States (assuming every account is a real person). In 2015, Facebook claimed it had indirectly created 4.5 million jobs worldwide. 

For people who work in traditional industries, the idea that a computer game could hold its own internal economy and create large numbers of jobs may sound flimsy. For Rob Whitehead, it’s as normal as a paper round. Before he went to Cambridge, Whitehead “built virtual goods - weapons, gadgets, that kind of thing” in Second Life, the online virtual world that has been running since 2003. “That was my job. I went into uni with a couple of tens of thousands of dollars’ worth of virtual money, made from this virtual thing. Of course from my side, I saw it as just content creation, but people within that world derived real meaning and had real experiences because of the things I made.”

Narula says most of the value now applied to goods is no more or less real than the things Whitehead built in Second Life. Design, scarcity, social value and skill dictate whether a piece of leather becomes a £1,000 handbag or a £3.99 windscreen cleaner. “So much of what we already do in the industries in which we create value is constructing realities on top of the base value of whatever it is you’re dealing with.”

A game with millions of players would have, Narula says, “its own massive, internally consistent economy”.

With millions – or hundreds of millions, or billions – of people joining a virtual world, the current thinking about what constitutes a video game would be left a very long way in the past. In fact, says Narula, “That stops being a game, and it starts being a country.”

If the games industry can produce new worlds of this size, the effects will be felt far beyond the community of players and PCs. “This is a fundamental thing,” says Narula, “equivalent to AI in terms of its potential importance to society. This comes under the category of those enabling technologies, industrial processes that no-one thinks of, but that happen to enable really important things that happen in the world. Distributed computing, and in particular this type of distributed computing, is that important, that fundamental – and that hard. It requires you to rethink the foundations of how applications are written.”

If Narula is right, it will require people to rethink more than just programming. The simulations that can be created in the hive-mind of Improbable’s distributed supercomputer are so complex that they may offer the chance to rethink how cities and transport systems and economic markets are run, and how governments create and justify policy. It may be the most disruptive technology in government since the ballot box.


The what-if machine


For policymakers the most important aspect of Improbable’s work is not the transformation of the $100bn gaming industry but the disruption of how policy is written and tested. “One of the most important uses of virtual worlds,” Narula explains, “is answering questions about the real world – a world of complex adaptive systems, which can probably not be understood unless we can recreate their behaviour at very large scale. The weather is a complex adaptive system, and the way we predict the weather is through massive-scale simulation. The same is true of so much of what we do.

“Most public policy is built on shaky assumptions on top of these complex adaptive systems, and being able to properly model these systems is going to make a big difference. Virtual worlds will become our collective “what-if” machine, before we try things in the  real world.”

Improbable is already using its technology in this way, with surprising results. One of the first projects was a simulation of the city of Cambridge and everyone in it: “the population, the transport network, the sewage network, the mobile phone network, electricity, gas, water, and also the spread of panic in certain situations. One of the things we found that was quite counter-intuitive was that in some situations, when something bad happens, damage can be limited by actually turning off communication, because it prevented panic spreading, which prevented traffic building up. That was startling. The idea that making people communicate less is going to help people in a disaster isn’t something we’re proposing as a policy, but these counterintuitive behaviours look to be interesting.”

In the planning of infrastructure, rational but counterintuitive arguments can often lose to more easily grasped assumptions. “The classic challenge,” says Narula, “is that a lot of the obvious thinking - building a road to reduce congestion, for example - turns out not to be true when you look at the real behaviour of these systems.” Infrastructure simulation could provide a cheaper, more effective way to determine the efficacy of contentious projects such as HS2 and allow for better planning of everything from telecoms networks to healthcare spending.

What Narula and Whitehead assume, of course, is that people will listen to reason. Brexit’s predicted impact on the economy, for example, actually became part of the anti-intellectual rhetoric of the Leave campaign. No prediction about the future of the country can be made apolitically, and it is more likely that virtualisation will be used more by businesses to pitch their case for policy changes than a newly enlightened government. 

What is certain is that if Narula and Whitehead succeed in providing the means to create new worlds for millions of people and to change the way governments and businesses plan for the future, their platform will become, like Windows and iOS and Facebook, a very powerful force in the world. Mark Zuckerberg once thought of himself as mere platform provider, outside politics, but recent events have forced him to confront the very real influence his company wields. Do the Improbable founders have a simulation for that?

“There are maybe six Olympian businesses on this planet,” Narula agrees, “and the fact is that no-one can argue that they don’t have a special and unassailable status of almost undisruptable, hegemonic control over certain aspects of life. I don’t know if that’s a situation that can continue without some form of rethink.

“Nobody wants to see another group of tech people get rich in a non-socially conscious way. We like to think that what we’re doing here will actually improve people’s lives in tangible and direct ways. That’s one of the reasons that public policy and government work were really fundamental in the early stages of the company. We didn’t go there because we thought it was where the most revenue was – we felt it was a way for us to understand what real problems we can impact.”

“But,” he adds, “video games are cool, too.” 

Will Dunn is the New Statesman's Special Projects Editor.