Thought Leadership

Why smart data legislation is key to the UK’s economic success

25 June 2024

Guest article: Ghela Boskovich, Head of Europe/Regional Director at the Financial Data and Technology Association (FDATA), discusses why smart data legislation is key to unlocking the full potential of open banking in the UK, and why it will lay the cornerstone of future economic success.

Fintech Week London is always abuzz with the latest trends and breakthroughs in the industry. This year was no exception, and the standout topic? Smart data.

Smart data, the secure sharing of customer data with authorised third-party providers, is the unsung hero behind the success of open banking.

Open banking is a testament to the power of smart data: there are over nine million active monthly users, sending over 16.8 million payment transactions in April alone. Since the beginning of 2024, HMRC has collected £3.5 billion in taxes using open banking technology, saving the public purse over £500,000 in bank charges. The open banking ecosystem, valued at more than £4 billion, has attracted significant inward investment and created around 5000 skilled digital jobs across the country.

Open banking has been a first, relatively cautious, step in laying the foundation for a data economy; its impact is a harbinger for what a truly smart data economy can do to maximise the economic value of the UK market for all constituents.

The DPDI Bill aimed to create a world-leading open data economy

The UK’s commitment to enacting smart data legislation through the Data Protection and Digital Information (DPDI) Bill was supposed to be our golden ticket to a world-leading open data economy. This legislation promised to enhance the benefits already enjoyed by open banking users and extend these advantages to other sectors: energy, finance, retail, transport, home-buying and telecommunications. It was weeks away from becoming a reality, however, when the general election was called, the Bill was left behind. 

Smart data’s recipe for economic growth is missing one key ingredient: the enabling legislation. The DPDI Bill would have given the UK just that, but now, without it, smart data sits on the sidelines. This underscores the critical importance of having the next government, regardless of the party in power, prioritise economic growth and innovation by accelerating a standalone bill for smart data.

Smart data legislation is not just another item on the policy agenda; it is the cornerstone of the UK’s future economic success. Prioritising smart data is essential for fostering a competitive market, driving cross-sector innovation, and creating a level playing field for those small- to-medium-sized enterprises (SMEs) that have been consistently left behind in the drive towards coupling finance and technology.

By accelerating a standalone bill for smart data, the next government can ensure that we continue to build on the momentum of open banking and extend its benefits across other sectors of the economy.

To fully realise the benefits of open banking and expanded open finance, we need to move from the current competition remedy under the CMA Retail Banking Market Investigation Order to the Long Term Regulatory Framework (LTRF). This transition will only be possible with legislative backing. The absence of the DPDI Bill – which would have enabled this transition – makes it clear that the next government must step up and champion this cause.

Rallying cry for the future prosperity of this country

Smart data is fundamentally about creating a thriving, competitive market where innovation thrives, delivering tangible benefits to individuals and businesses alike. As we stand on the cusp of a new era, the prioritisation of smart data by the next government is crucial to the UK economy and its growth. This is not merely a call to action but a rallying cry for the future prosperity of this country. Let’s ensure that smart data becomes the driver of our economic strategy, propelling us towards a more innovative and prosperous future.