F E AT U R E S T O R Y THE FINTECH TIMES
UK: The Future of Open Banking Regulators have pencilled in an ‘end of 2022’ deadline to draw up plans for a new entity to lead the further development of open banking. Will this help maintain the UK’s position as a global leader?
O
pen banking is undoubtedly a UK success story, with significant take-up and increasing growth; more than five million people in the UK are actively using open banking services. Indeed, many other countries have looked to the UK’s approach as they develop their own models. But attention has now turned to how the open banking regime should evolve in the future. At the end of March, the Competition and Markets Authority (CMA) unveiled recommendations for the next steps in the future oversight and governance of open banking. Under the plans, the Financial Conduct Authority (FCA) will jointly oversee the future of the UK’s ongoing open banking implementation, alongside the Payments Systems Regulator (PSR) – with HM Treasury and the CMA lending support. The CMA’s recommendations will be taken into consideration in the design of a future entity to succeed the Open Banking Implementation Entity (OBIE) – the entity set up by the CMA in 2016 to deliver open banking, funded by Allied Irish Bank, Bank of Ireland, Barclays, Danske, HSBC, Lloyds Banking Group, Nationwide, Natwest Group and Santander. The future entity would build on the significant progress made to date by the OBIE to encourage innovation and support competition in retail banking. In summary, the future entity will: ●
●
●
6
Have effective regulatory oversight, with a new Joint Regulatory Oversight Committee (JROC) to agree and implement the next steps led jointly by the FCA and PSR Have independent and accountable leadership, with a majority of independent directors on its board Be adequately resourced to carry out its functions through a more broadlybased and sustainable funding model
|
Edition 44
●
● ●
Effectively serve the interests of consumers and small and medium-sized businesses, including consideration for how these groups will be represented in the governance of the entity Be sustainable and adaptable to the future needs of the sector Have a system to effectively support the monitoring and enforcement of the Retail Banking Market Investigation Order 2017.
Andrea Coscelli, chief executive of the CMA, comments: “Open banking has been a major success in the UK, bringing innovative new services to retail banking and benefiting consumers, businesses and the UK economy. The CMA has carefully considered the appropriate future arrangements to boost open banking so that its significant benefits can be realised even more widely.” While OBIE’s trustee and chair, Charlotte Crosswell, added: “We welcome the announcements by the government and regulators and the endorsement it gives for the future of open banking to our thriving ecosystem. There has been significant collaboration in developing the infrastructure, standards and ecosystem that we have in place today. We now need to drive forward competition and adoption and realise the benefits of innovation for consumers and businesses across the UK. We will look forward to working with the new Joint Regulatory Oversight Committee over the course of this year.”
INDUSTRY FEEDBACK
The CMA’s announcement has been largely welcomed with many saying clarity is critical for the evolution and further standardisation of open banking within the UK. Adam Jackson, director of policy at the UK fintech community body Innovate Finance, said: “We welcome the CMA’s response on future plans for an open banking entity, which we have been calling for to provide the industry with greater clarity on the evolution in the UK. This is an important
step in maintaining the UK’s position as a global leader in open banking.
While, Nanna Saito Nielsen, VP of banking operations at account-toaccount payments firm GoCardless, said: “We’re glad to see the CMA has published new guidance on the future of open banking. It’s not so
much a resolution, however, as it is a signal that we’ve entered a critical phase of open banking development. We can’t afford to lose focus now.
