The Future Development Of Open Banking In The UK - Final Report
Summary of Development
More than 6.5 million consumers and SMEs in the UK already use open banking-enabled products and services, contributing to UK leadership in the fintech sector, with UK citizens and businesses benefiting from increased competition, choice, and innovation. Last year HMRC stated that their adoption of open banking had saved the public purse over £500k in bank fees with more than £10.5bn tax collected to date through open banking payments, demonstrating the efficiencies this new capability can deliver. In January 2023 the CMA announced that the six largest banking providers had implemented all the requirements of the Open Banking Roadmap.
In order to build on this success, the Government and regulators set up the Joint Regulatory Oversight Committee (“the Committee") to take forward the development of open banking beyond the CMA Order. The co-chairs of the Committee, the FCA, and the PSR, convened a Strategic Working Group (SWG) to collect empirical evidence and collate views from industry and other stakeholders to input the future development of open banking in the United Kingdom.
The SWG created an open banking strategic sprint process to address questions set by the Committee under three priority areas: Payments Strategy Sprint: Unlocking the potential of open banking payments, Data Strategy Sprint: Promoting further data sharing in an open banking framework [and] Ecosystem Strategy Sprint: Ensuring a sustainable open banking ecosystem. The process elicited a broad base of evidence and opinions about the future of open banking and ways to best deliver that future. In total, over the course of two rounds of strategy sprints conducted from September to November 2022, the SWG Secretariat received 189 written submissions from open banking industry stakeholders, end-user representatives, and independent subject matter experts.
The first round of strategy sprints identified five main gaps between the current state and what many respondents suggested was a more optimal future state for the UK open banking ecosystem. The second round of sprints focused on identifying a range of possible solutions, both short-term and long-term, that could bridge these gaps to unlock the potential of open banking payments, further data-sharing propositions and build a more sustainable open banking ecosystem. It was evident throughout the SWG process that key stakeholders of the open banking ecosystem share a desire for open banking to work well for consumers and businesses, enabling them to take advantage of new ways to manage their finances and have more options for payments in a safe environment. However, despite this common desire, it is evident that stakeholders have considerably different views when it comes to the detail of how to achieve this. It is also clear that many stakeholders have differing visions for the future of open banking and varied views on the forward-looking agenda, including on the structure and funding of a Future Entity (or entities). This report aims to reflect divergent views on key issues and identify areas of potential or emerging alignment.
The Future Development of Open Banking in the UK provides empirical evidence to assist the Committee in considering and making decisions that will shape the future of open banking in the UK.