Fin Tech week 2023 has kicked off with HM Treasury’s long-awaited recommendations for the next phase of Open Banking in the UK.
With 29 actions over the next two years, this is a clear roadmap for the Joint Regulation Oversight Committee (JROC) to deliver and progress is undoubtedly being made. Amongst the measures, the report sets out plans to:
- Test a commercial model for open banking and establish a future open banking entity;
- Increase the total number of active Open Banking users in the UK;
- Rapidly grow the scale of investment in Open Banking.
More detail on the future entity for Open Banking and the transition of the OBIE is also expected shortly, as well as plans to create a smart data scheme under Part 3 of the Data Protection and Digital Identity (DPDI) Bill.
However, there are still questions over digital identity, use of smart data, and the transition to Open Finance. Further clarity is needed for industry to press ahead with investment, innovation and expansion to ensure the UK remains a leader in open banking.
So how can businesses and organisations in the sector shape what comes next? The WA financial services team shares their advice on what the sector should do.
1. Input is still needed on where barriers to progress exist
The JROC report sets out Treasury’s blueprint for how open banking can be pushed further and reach an increasing number of users. As part of their vision JROC are looking for sector input so they can better understand what is needed to ensure the sector prospers.
This is an opportunity for businesses to:
- Outline where regulation hasn’t matched pace with innovation
- Highlight where policy clarity is needed, particularly in terms of interdependencies
- Demonstrate where open banking functionality can be used in other markets
2. UK consumers still need clarity on what Open Banking means for them
Whilst Government and industry alike has heralded the success of Open Banking implementation in the UK, there is still work to be done with consumers to educate them on what it means for them. Our research – conducted in January 2022 – shows that only 41% of consumer have heard of open banking, and of those only 36% could explain what it does.
Businesses need to:
- Build a clear case for how open banking functionality is used in every day life
- Address and demystify concerns over data security and sharing
- Help consumers realise the benefit of open banking for their financial health
3. MPs and policy makers want to build their understanding
With the Retained EU Law Bill radically changing the way policy and regulation is made post-Brexit, There is a clear gap for businesses and industry bodies to shape MP understanding of Open Banking functionality and how it is implemented.
When businesses think about engaging MPs, our survey from earlier this year shows that:
- MPs want to see evidence of consumer outcomes – 42% said they wanted to see case studies and examples of good outcomes for customers
- They want a deeper understanding of consumer data and insight – 44% say they need evidence points to help shape their opinion
- Solutions, rather than problems, are the way to engage – only 22% of MPs want to hear about the challenges facing the sector, compared to the 37% who are eager to hear from businesses on how they can be solved
In June, WA will be joined by experts from across the sector to discuss the future of Open Banking and Open Finance in more detail, with fresh insights and advice on how businesses and industry can shape long-term thinking in the space.
To find out more, or to register to attend the event, contact WA Director Natasha Egan-Sjodin at email@example.com