Harry Weber-Brown, CEO, TISA Digital
Today marks one month since The Competition and Markets Authority (CMA) announced a new committee (the Joint Regulatory Oversight Committee) to oversee the continued rollout of Open Banking in the UK beyond the scope of CMA Order. Open banking allows for the secure exchange of data between banks and third-party providers. It was first introduced in 2018 to drive competition and innovation within the fintech industry.
At the start of this year, over five million people and businesses were using services powered by open banking. That is predicted to rise to 60 percent of the population by September 2023. Open banking brings many benefits, such as helping consumers save money through wider access to personal finance management apps, easier mortgage applications (by removing the need to provide physical bank statements) and simplifying existing processes such as checking your credit score.
The new committee in charge of implementing Open Banking will be chaired by the Financial Conduct Authority (FCA) and the Payments Systems Regulator (PSR) – with the Competition and Markets Authority (CMA) and Treasury attending as members. The Joint Regulatory Oversight Committee (JROC) will be tasked with overseeing the regulatory framework of open banking technology. Going forward, it will be crucial for the new committee to build on existing regulation of open banking to fully unlock its potential and ensure the UK remains a global leader in the fintech industry.
More and more innovative products come to market every day, but it is imperative that we keep up this momentum. Open banking has revolutionised the way we access financial services, but we must now look beyond, to what broader open finance could achieve. Last year, the Kalifa Review called for support and innovation to ensure a competitive fintech environment in the UK. While we have seen positive responses from a range of stakeholders to the review and the recent CMA announcement, there remains uncertainty among fintechs around how open finance will be delivered. For the UK to retain its position as a global leader in the fintech the industry we need to address how we move beyond open banking and towards open finance.
We must look at incorporating open savings, investments and pensions (OSIP) to broaden digital access to the full scope of financial services. TISA’s OSIP scheme is already underway and has a Sandbox available for firms to test connections. Just as you can compare car insurance online today, we hope that soon you will be able to quickly and in a transparent manner review your savings, investment and pensions, so you can make better financial decisions and switch from one organisation to another if you’re not getting the best available deal that suits your requirements.
OSIP would enable fintechs and other financial institutions to access savings, investment and pensions data via application programming interfaces (APIs), bringing this kind of data sharing in line with open banking security, data minimisation standards and delivering a better user experience. As a result, individuals would be able to compare accounts more easily, switch to a better rate, automate their savings or make more informed trade-offs about whether to save, invest, spend, borrow or consolidate. This is what is needed to make the UK financial services industry, the most pioneering in the world, to ultimately enhance competition and consumer financial wellbeing. TISA have also been working on a Digital ID scheme which will enable the consumer to control their consent to share data in an open finance environment.
Without sufficient regulation and an agreed interoperable approach between initiatives (such as Open Banking, Pensions Dashboard and Open Savings, Investments and Pensions), we risk limiting the progress and potential of open finance including OSIP. We need to build on the already existing ecosystem, infrastructure and technology. This will guarantee we not only continue creating jobs and value within the economy but also the financial services revolution for consumers and businesses.
We must ensure that the UK maintains its position as global leader in consumer financial services. This is the moment and the way to do it.
