The UK has reached a key stage for the ongoing development of Open Data initiatives. The Open Banking Implementation Entity (OBIE) is now nearing the completion of creating Open Banking guidelines and the Competition and Markets Authority (CMA) has finalized a consultation on the updated governance model for Open Banking.
These developments in Open Banking will impact other initiatives related to data mobility in financial services and various regulated sectors. It’s now critical to ensure that the United Kingdom continues to support Open Banking initiatives.
There are also key stakeholders focused on data mobility initiatives with considerable crossovers, such as:
- the Financial Conduct Authority’s (FCA) consultation on Open Finance
- the Fintech Review’s recommendation on Open Finance
- the Department for Business, Energy and Industrial Strategy’s (BEIS) consultation on Smart Data working cooperatively with the industry on what’s required to take Open Data forward
- other regulated sectors looking into the best way or method to launch Smart Data initiatives, such as the telecom sector
TechUK has been reviewing these developments as part of its response to the CMA’s consultation, which called for the UK government, authorities, regulators and industries to work together to support Open Banking. Data mobility in regulated industries is also being supported in order to ensure competition, innovation and enhanced products and services for all clients.
TechUK also noted that it’s important to ensure that the funding model is fair and equitable. The industry body has recommended that adequate resources must be provided so that consumers are able to take advantage of these initiatives.
Open Banking is an initiative introduced by the CMA (in 2017) after the Payments Services Directive and the CMA’s Retail Banking Market Investigation. Open Banking lets consumers and businesses share their bank account details in a secure manner with trusted third parties that may use the financial data to assist them with saving time and money by finding the best products for the specified requirements.
Since its introduction, Open Banking now has approximately 3 million active clients, and it’s estimated that over 50% of SMEs use tools that leverage the financial data-sharing method.
The OBIE’s roadmap offers the steps needed to complete the implementation of Open Banking. The CMA and other stakeholders are now working on the future governance model for Open Banking.
The OBIE has enabled Open Banking so it can become widely adopted. The UK is now considered a pioneer in Europe and a model for other countries across the globe. The gradual transition from the governance framework in the implementation phase to an established governance framework is considered a critical step in the success of the initiative.
Although a lengthy transition period might have its drawbacks, it’s still a lot more preferable to a rushed or sudden transition or any uncertainty as to whether Open Banking will be a part of the future of financial services.
The OBIE has played a key role in supporting Open Banking and making it a reality via monitoring, standards, and regular ecosystem building activities. Recent contributions and input from the FCA on Open Finance and the work from BEIS on Smart Data have added considerable value to the initiative as well.
But TechUK thinks that a lot more coordination and collaboration is required between stakeholders such as the CMA, HM Treasury, the FCA, and BEIS. These organizations must work on the UK strategy for Open Data initiatives.