Today, approximately three million UK citizens and small businesses are active users of open banking-enabled products.
EMPOWERING CITIZENS AND SMALL BUSINESSES
Open banking helps citizens and small businesses make better decisions. Decisions about the things that really matter to them: How much should I save? How much can I spend? Should I borrow? It helps them figure out which financial products are best for them. Fundamentally, open banking is delivering a public good.
“The progress we have made so far has been by design, and the product of relentless effort and significant investment by the entire open banking ecosystem.”
Today, over three million UK citizens and small businesses1 are active users of open banking-enabled products. The ecosystem is thriving: 301 firms are active in the market2, with another 450 in the pipeline3.
But this is just the beginning. The final components of open banking are now falling into place, and it feels like it is just a matter of time until tens of millions of users are benefiting from products powered by open banking.
The UK has always been at the forefront of innovation in financial services. With this in mind, the Government boldly directed the largest financial institutions to implement open banking. The UK now leads the world in this innovative new technology. The UK’s version of open banking is being closely watched and adopted around the world. The progress we have made so far has been by design, the product of relentless effort and significant investment by the entire open banking ecosystem. The vast array of contributors includes the UK Government and regulators, the UK’s largest banks and building societies, card companies, hundreds of FinTechs, consumer and small business groups, advisory groups, and, of course, my colleagues at the Open Banking Implementation Entity (OBIE).
As Trustee, I am appointed by the Competition and Markets Authority (CMA) to deliver the mandatory aspects of open banking. My approach is to use collaboration and consensus to deliver the best outcomes for end users. I have to do this whilst operating within the parameters of the CMA Order and also ensuring the obligations on industry are both proportionate and effective. In doing so, I have sought to encourage competition, and create commercial opportunities through innovation. I am pleased to say I have already seen innovation with purpose, including propositions that help vulnerable users, particularly in the areas of mental health and over-indebtedness.
1 Source: CMA 9 monthly MI reports submitted to the OBIE. Note the actual number of active users of open banking-enabled apps and services will be larger as c.70 ASPSPs not members of the CMA 9 have also implemented the Open Banking Standards.
2 Source: OBIE data on the number of firms, both TPPs and ASPSPs, that have fully completed the enrolment process into the OBIE’s Production Directory.
3 Source: OBIE data on the number of firms registered in the OBIE’s Sandbox Directory and awaiting permissions4.
4 All data points correct as of February 2021.
The OBIE is the not-for-profit organisation that lies at the heart of the open banking ecosystem. It is funded by (but fully independent of) industry; and its governance, role and responsibilities are determined by the CMA’s Order. The OBIE is built on the principles of openness, inclusivity, and independence. It plays three important roles: it enables me, as Trustee, to discharge my regulatory responsibilities and supervise the implementation efforts of the largest financial institutions; it shapes and champions the open banking ecosystem; and it provides critical services and infrastructure to that ecosystem. In that sense, the OBIE is itself delivering a public good.
2020 was a tough year and I am phenomenally grateful to my OBIE colleagues for their unceasing efforts, expertise, and hard work. Through their dedication, and the support of the entire ecosystem, we maintained momentum in the open banking programme. This was no small achievement in itself. One highlight was the agreement of the new Roadmap. This will allow us to complete the mandatory implementation requirements of the CMA Order and deliver much-needed performance improvements and additional functionality.
A NEW-LOOK OBIE
Another highlight was completing the first phase of transforming the OBIE organisation from a singularly focussed programme delivery body into an ecosystem enabler and services provider. The transformation included outsourcing operational functions in order to realise greater efficiencies and service levels. It also involved transitioning from a 100% contractor model to an employee-based organisation. This transition had the potential to be deeply unsettling for staff at the OBIE, but I am delighted that the feedback from our teams shows it was enthusiastically welcomed.
The transition has allowed us to build on the culture, values and processes associated with a mature organisation. Whilst there is always room to improve, our gender and diversity statistics are encouraging, with two in five employees identifying as female and one in four identifying as a minority. We actively track our progress in this area and will continue to do all we can to make the OBIE as representative as possible of the public that open banking is intended to serve.
2021 is a year of opportunity and one in which we intend to maintain our momentum. By the end of the year, we will have delivered the bulk of the Roadmap. This will include additional functionality such as refunds, and items such as Variable Recurring Payments (VRP) and Sweeping. These items have the potential to enable really impactful use cases and are currently in consultation.
We have started work on Premium open banking standards (also known as Premium APIs) by hosting a self-funded project outside the scope of the CMA Order. These Premium APIs will unlock additional value beyond the minimum regulatory requirements including, for example, in the area of identity attributes. This is an exciting first step, which moves open banking beyond a regulatory initiative and enables industry to realise the commercial benefits of their efforts.
“The OBIE has built unique expertise and assets. It would be sensible and beneficial for these to be leveraged into other initiatives. ”
The CMA will also begin the process of determining what the future state for the open banking programme will be. In parallel the Government will announce its vision for new Open Data initiatives in the financial sector and other utilities. The OBIE has built unique expertise and assets in these areas: it would be both sensible and beneficial for these to be utilised in these adjacent initiatives, ensuring that people and small businesses can access their data in the same safe and secure manner, regardless of product or sector.
Citizens and small businesses are already using open banking-enabled services in their millions, and more providers are coming on stream all the time. I am confident that we will see the continued adoption of open banking, particularly if the other strands of Open Finance and Open Data are brought together under a harmonised framework. The UK was bold in being the first country to mandate open banking, and I hope it can once again take the lead in delivering a form of Open Data that works hard for the public good.
Imran Gulamhuseinwala OBE
Open Banking Implementation Trustee