The Open Banking Implementation Entity (OBIE), creator of the software standards connecting banks and fintechs in the UK, has announced it will transition into a new entity and regulatory framework in 2023.
In March 2022 by the Competitions and Markets Authority (CMA), Financial Conduct Authority (FCA), and Payment Systems Regulator (FSR) have put together a Joint Regulatory Oversight Committee with the purpose of exploring the best model to oversee the future of Open Banking in the UK.
The current plan is to create a new entity to ensure Open Banking remains competitive, provide technical infrastructure, and ensure compatibility between industry players.
The recent history of the OBIE
In 2016, The Competition and Markets Authority (CMA) published a report on the UK’s retail banking market. According to the institution, the report found that older, larger banks don’t have to compete hard enough to gain customers’ business, while newer banks find it difficult to access the market and grow. One of the CMA’s recommendations to tackle this problem was Open Banking.
Since 2018, the Open Banking ecosystem has enabled customers and SMEs to share their current account information securely with third-party providers, who use that data to tailor their apps and services to peoples’ specific financial circumstances.
The future entity is expected to be overseen by the Open Banking committee and the CMA before establishing a ‘long-term regulatory framework for Open Banking’ underpinned by necessary legislation.
There is an upcoming update, which will outline the recommendations for the future Open Banking entity, and will be announces before April 2023. Commttee co-chairs Sheldon Mills and Chris Hemsley, of the FCA and PSR, have issued a joined statement announcing that Open Banking and its future continue to be a priority for the FCA and the PSR.
The OBIE published a status report in June 2022, according to which Open Banking adoption has continued to grow, with 10–11% of digitally-enabled consumers now estimated to be active users of at least one open banking service. This is up from 6–7% in March 2021.
In the six months to March 2022, there were 21.1 million Open Banking payments, compared with 6.1 million in the same period in 2021. Availability of services continues to expand, however growth is increasingly coming from participants which are not regulated as Third Party Providers (TPPs), such as agents.
In March 2022, there were 128 fully regulated firms with live-to-market open banking-enabled products and services. This figure has remained static since September 2021.
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