OBIE launches new Fingleton and ODI report examining the purpose, progress and potential of Open Banking

The OBIE is pleased to announce the launch of a report it has commissioned from Fingleton and the ODI which examines the purpose, progress and potential of Open Banking. “Open Banking: Preparing for Lift Off” reviews the progress already made, the potential for Open Banking to become a cornerstone of the digital economy and makes some detailed recommendations on how Open Banking could be further strengthened.

The report acknowledges the firm foundations upon which Open Banking has been built. It singles out the UK’s global leadership position, noting that the Standards have been adopted as a blueprint around the world. The report further acknowledges that Open Banking has already kick-started an ecosystem of digital innovation even though the banks have not yet completed implementation. The potential and opportunity for Open Banking to deliver a range of use cases to the benefit of consumers and small businesses are highlighted in the report.

Some key priorities and recommendations for Open Banking identified within the report include improving payments capabilities and refund functionality, the development of Premium APIs and improving consent protections for consumers. In addition to this, and echoing recent reports from BEIS, the Furman Review, the Smart Data Review, amongst others, it is clear that the Open Banking platform and infrastructure have extensibility into other sectors and geographies, and in particular, into the creation of an Open Finance ecosystem.

Trustee of the Open Banking Implementation Entity (OBIE), Imran Gulamhuseinwala OBE commented:

“This report clearly demonstrates how far the Open Banking initiative has progressed, and the potential that exists to help create a banking market that better serves consumers and small businesses. Nonetheless, PSD2 is not a complete solution and we need to further develop the Standards if Open Banking is to fully meet its objectives. As the report points out, there is a pressing need to address refunds, Premium APIs and Open Finance. In time, Open Banking has the potential to become a cornerstone of the digital economy by contributing to other sectors and components of digital identity.”

The report was launched by the OBIE and its authors at a reception in the House of Commons on the 16 July, hosted by Adam Afriyie MP. At the event, the Economic Secretary to the Treasury, John Glen MP, said:

“Open Banking has the potential to transform how we manage our finances, giving people more information and control over their money than ever before.

“Many firms are already using this to build innovative products which offer accessible financial advice and enhanced credit assessments.

“I look forward to seeing what the future holds for Open Banking, which is creating a banking sector that is more dynamic and competitive, whilst being more inclusive and effective too.”

John Fingleton, CEO of Fingleton, summarised the potential he sees for Open Banking:

“Open Banking is the first attempt by competition authorities to use technology to rebalance complex markets towards consumers. While great progress has been made so far, more is needed to guarantee that it takes off with consumers and business users. This matters for more than just banking: making a success of it here gives us a model for similar steps in other markets where customer inactivity or loyalty can leave people worse off.

“There are two ways to tackle the so-called “loyalty penalty” – price controls and regulation that damages competition, or reforms that open markets up to competition and make it easy for customers across the market to access and act on the best deals for them. The Open Banking model applied to energy, telecoms, mortgages and insurance could eliminate the “loyalty penalty” in these markets while driving more competition and innovation for consumers, not less.”

Jeni Tennison, CEO at the Open Data Institute, said:

“Increasing trustworthy access to data can help build a future where people, communities, businesses and governments make better and more timely decisions. Open banking is a significant initiative to help build this future – it can help people get better and more innovative banking services. When we helped start this initiative we could only imagine the potential impact that it could deliver, it’s great to see this impact being realised and to use Open Banking’s leadership to learn where that impact is different from what we expected. It’s now time to take the next step in making data work for everyone.”

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The report used the following sources: Stakeholder interviews with third party providers (TPPs), representatives of banks, the OBIE, CMA and FCA staff and consumer representatives; workshops held by the OBIE; review of internal OBIE documents; review of relevant data; and desk-based research.

For further media enquiries:

OBIE: press@openbanking.org.uk

Fingleton: press@openbanking.org.uk

The ODI: helen.desmond@theodi.org, izzy.roberts@theodi.org
Helen Desmond 07984 813831, Izzy Roberts 07531 271416

About Us

Open Banking is a new, secure way for customers to take control of their financial data and share it with organisations other than their banks. Open Banking has the power to revolutionise the way we move, manage and make more of our money. For businesses, it is about making the management of cashflow and receiving payments cheaper and easier. Open Banking will make things simpler, faster and more convenient.

Open Banking follows the Competition & Markets Authority (CMA) investigation into the supply of personal current accounts (PCAs) and of banking services to small and medium-sized enterprises (SMEs).

Open Banking was created to enable innovation, transparency and competition in UK financial services. It is tasked with delivering the Application Programming Interfaces (APIs), data structures and security architectures that will enable developers to harness technology, making it easy and safe for individuals and SMEs to share the financial information held by their banks with third parties.

Open Banking will bring substantial benefits. It gives customers and SMEs greater market choice and greater control over their money and associated data, along with better and easier access to new financial services providers in a secure environment.

Notes to Editors:

1. Open Banking Ltd was set up by the Competition & Markets Authority (CMA) in September 2016 to fulfil one of the remedies mandated by the CMA following an investigation into UK retail banking.

2. The CMA’s investigation into the retail banking market (whose findings were published in August 2016) concluded that older and larger banks do not compete hard enough for customers’ business and that Open Banking should deliver a new, secure option for customers to be able to compare the deal they are getting from their bank.

3. Open Banking was created to enable innovation, transparency and competition to UK financial services. It is tasked with delivering the Application Programming Interfaces (APIs), data structures and security architectures that will make it easy and safe for customers to share their financial records by January 2018.

4. The data provided by Open Banking will enable developers to harness technology that allows individuals and businesses to share their financial records held by their banks with third parties.

5. Open Banking is a private body; its governance, composition and budget was determined by the CMA. It is funded by the UK’s nine largest current account providers and overseen by the CMA, the Financial Conduct Authority and Her Majesty’s Treasury.

6. The 9 mandated institutions (referred to as the CMA9) are: Barclays plc, Lloyds Banking Group plc, Santander, Danske, HSBC, RBS, Bank of Ireland, Nationwide and AIBG.