Open Banking could realise GBP 18 bln a year to consumers and SMEs in the UK

Wednesday 26 June 2019 14:05 CET | News

A new report shows Open Banking could realise GBP 18 billion value for people and small businesses in the UK over the course of a year.

The report, Consumer Priorities for Open Banking, highlights the complex challenges ahead to realise this value and sets out a series of priorities for the industry, regulators and government.

Recently, the Independent Consumer and Small Business Representatives for the Open Banking Implementation Entity (OBIE) have written to the Implementation Trustee of OBIE, the Competition and Markets Authority (CMA), the Financial Conduct Authority (FCA), HM Treasury and the Department for Business, Enterprise, Industry and Skills (BEIS), FDATA and UK Finance to set out the need for action to ensure Open Banking delivers on its promise and potential to make consumers better off.

The report shows that together, people and small businesses could stand to gain GBP 18 billion from Open Banking over the course of a year (GBP 12 billion and GBP 6 billion respectively). Overstretched people could save as much as GBP 287 per year, 2.5% of their annual income.

Consumers need and deserve more from financial services than they currently get. They want more tailored services which reflect their lifestyles and simple, intuitive products that help them make sense of their lives.

Many of the most valuable Open Banking-enabled propositions are not yet available to consumers and there are a range of barriers which prevent these services coming to market today.

Even where services are available, the past scandals of PPI mis-selling combined with tech-giants’ questionable use of data makes consumers wary about who they can trust. They want to know that firms are acting with their best interests at heart in a way that is ethical and responsible.

Open Banking could make a fundamental difference to the financial health of people and small businesses in the UK and has shown some encouraging early signs. But the industry needs help to realise the full potential of Open Banking. Our report sets out how the government, regulators and industry can work together to:

  • deliver greater value for consumers;

  • build a trustworthy ecosystem; and

  • stimulate the market to action quicker.

For Open Banking to be a success, co-ordinated action by government and regulators is needed urgently to create a more holistic regulatory regime for data sharing in the UK. If not, it could have unintended and harmful consequences, limit competition further or exacerbate financial exclusion. The FCA’s commitment to look at Open Finance, the promise of the Digital Markets Unit, BEIS Smart Data Review and HM Treasury’s review of the payments landscape could set us on the right path to securing better financial health for all consumers in the UK.

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Keywords: Open Banking, report, OBIE, small businesses, CMA, FCA, UK, regulation
Countries: World