Against a backdrop of multiple financial frameworks and regulatory initiatives, the King’s Speech and the Autumn Statement signalled the Government’s intent to unlock the full potential of open banking, including its role in shaping the UK’s payments landscape. This was again outlined within the Future of Payments Review (published alongside the Autumn Statement), commissioned by HMT and led by former Nationwide CEO Joe Garner.
Containing feedback from more than 100 of the UK’s financial institutions, the review highlighted the opportunities to align regulation and industry priorities to ensure improved consumer and retailer choice, and enable a world-leading payments environment for the UK.
The review demonstrated the positive impact that open banking can have on improving the payment journey and experience. Along with other key organisations and stakeholders we welcome this outcome, which will place open banking processes and capabilities on a secure long-term footing. We explore the review further in our summary below.
With the Data Protection and Digital Information (DPDI) Bill likely to pass in the new year, the Government has welcomed open banking as a critical driver of the UK’s financial ecosystem – and the review will play a significant part in achieving this.
As announced in last month’s Autumn Statement, the Chancellor has adopted much of what was recommended in the review, including repealing the prescriptive EU-based payments authentication rules.
We will also see the Government unveil the new National Payments Vision (NPV), again championed by the review; as a mechanism to drive open banking, the NPV will prioritise and drive the open banking framework to help mitigate fraud and improve the customer experience of digital payments.
Launched earlier this summer by the Chancellor, the review focused on giving consumers complete autonomy in their choice of payments. The review is broad in scope, covering consumer spending, digital and financial inclusion and exclusion, the streamlining of services, and aligning and prioritising regulatory and industry initiatives.
World-leading payments environment It found that a world-leading payments environment is vital for a world-leading economy and a healthy society, concluding that an economy can only grow with the appropriate payments infrastructure to support it. The UK’s ‘secure, reliable, and resilient’ economy has created the perfect environment for open banking, achieving a dynamic and future-looking banking system.
We are pleased to have played our part in the review and to see open banking at its heart as a key payment initiation solution.
With that in mind, the review made strong recommendations that the Government adopt a National Payments Vision (NPV) and strategy. It argued that in doing so, the NPV would outline the sheer importance of payments, both to consumers and the economy, and the highly interdependent nature of the payments arena.
Achieving this will simplify the landscape, fostering a healthy payments ecosystem, and unlocking GDP growth through supporting small business growth, frictionless trade, and fintech innovation. The NPV’s existence will assure a bright future for the ecosystem.
In achieving this, the report argued that open banking should be leveraged to improve person-to-person bank transfer payments journeys. Doing so would mean that the open banking journeys made in Britain would rival ‘the best in the world’.
With the Government taking on board the recommendations and actions outlined in the Future of Payments Review, it is clear that open banking has a key role to play in moving the UK’s financial framework into the future. It will play its part in securing a modern and dynamic financial system and providing a public good for UK consumers and businesses.
Cover image source: Gov.UK