This year has been pivotal for OBL as the final CMA Roadmap has been completed and we are now looking to transition to a future entity and a Long-Term Regulatory Framework that can harness our successes. This includes developing new commercial propositions and supporting the move to a smart data economy.
We will move to new arrangements agreed by the JROC but continue to protect the ongoing requirements of the Order to deliver benefits to consumers, businesses, and the wider economy.
OBL will continue to maintain the Open Banking Standard and reasonably promote Open Banking to encourage mass adoption. In September 2024 we reached 11.16 million users, and we hope this impressive growth will continue.
Our core services – maintenance of trust services and a recognised Standard among other things – could also be used to support digital ID and to support the mass adoption of smart data schemes with verification services.
Given the Government has now introduced the Data Use and Access Bill, the UK can lead the next wave of this financial innovation.
We hope that the Government will take a strategic, top-down approach and that government ministers will be given powers to mandate participation in smart data schemes in key economic sectors including energy, finance, telecoms, and retail.
Seeing these smart data schemes in day-to-day use for many consumers and businesses will be a natural evolution of Open Banking, and edge us closer towards a smart data economy.
We started life as a competition remedy, so we need to give credit to the regulators for that centralised and mandated approach, which created a blueprint that has been emulated in more than 60 countries. Now we are one step closer to moving to a sustainable commercial and regulatory framework.
International markets need global standards ensuring cross-border data flow interoperability and a central body to monitor and enforce compliance. Markets cannot operate in silos, and this presents a powerful opportunity to collaborate and consult internationally.
With data-enabled exports from the UK to the EU alone valued at about GBP 91 billion, the economic potential of a robust global standard cannot be underestimated.
While Open Banking has made good progress, its benefits have so far been limited to payments and data from current accounts.
Open Finance will extend these benefits to mortgages, pensions, investments, and savings. We are already seeing its impact on home-buying, for example, where effective data sharing between organisations in the chain can speed up mortgage lending and streamline a house purchase.
We are also seeing major pension providers use Open Banking, building single-view dashboards for customers so they can see all their pensions in one place.
Industry collaboration and innovation are already reaping rewards, and a regulatory nudge will support further momentum.
This will help to increase engagement with all financial services, as well as build trust and familiarity with data sharing, where we still see some hesitancy. Harmonisation will also help adoption, particularly concerning digital verification.
An upgraded financial ecosystem, and personal data mobility, could also boost UK GDP by GBP 30.5 billion.
Trust and security have always been integral to Open Banking. We have secure data-sharing practices, use high-quality APIs and encryption, and run a trust framework which is secure and protected. We expect the long-term framework will prioritise consumer protection and how to effectively tackle fraud as an industry.
Consumers can feel confident that the technology is built on the same secure systems used by banks and fintech firms, while the firms which produce Open Banking products and services are regulated by the Financial Conduct Authority.
In terms of trust in data sharing, it’s also vital that people understand that they are completely in control of what they share, with whom and for how long and that they can withdraw their consent at any time. Consent and trust are key to our currency.
Many people have used Open Banking without even realising it – to make a payment or to connect their business banking data to their accounting software. As adoption and familiarity with the increasing number of products and services, grows, we hope that people will feel confident in using Open Banking without needing to understand the engineering behind it.
This editorial piece was first published in The Paypers' Open Finance Report 2024, the latest comprehensive market overview and analysis focusing on the key players and products within the Open Banking and Open Finance ecosystem. Download the full report to discover more insightful content.
About Henk van Hulle
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