Innovation will be key to the government’s “growth, growth, growth” ambition

07 October 2022

Update from Charlotte Crosswell, Chair and Trustee, Open Banking Implementation Entity (OBIE)

This week I joined UK business leaders at the annual Conservative Party Conference, during which the Prime Minister outlined the government’s plan to transform the UK into an aspiration nation. The government reaffirmed its commitment to boost business-led growth and investment and “growth, growth, growth” was the key theme of the Prime Minister’s inaugural speech.

Over the three-day conference I had the pleasure to address the ‘Trade, exports and the path to Global Britain’ panel organised by Centre for Policy Studies and the City of London Corporation.  We discussed how open banking will play an important role in the government’s pro-growth agenda, helping consumers and businesses manage the increase in the cost of living.

Consumers and small businesses are already reaping the rewards of open banking, helping them to keep on top of expenditure and daily budgeting, cut card-processing costs, and shop around for better financial products and services – it is a true British success story.

But there is more that can be done. In the context of international trade for example, open banking has the potential of becoming a key asset in digital trade negotiations.

If history has anything to show, it is that – especially as far as British financial services are concerned – innovation is always part of the solution. 

Difficult economic times bring with it unique conditions which allow innovators to think and move more freely to create rapid, impactful change. The UK is nothing if not innovative and historically, it has demonstrated its ability to react agilely to a crisis so that it can be turned into an advantage and emerge stronger than ever.

One example of this was the 1866, economic downturn known as The Panic. In this instance the Bank of England acted counterintuitively and instead of tightening up on lending, it actually increased it, assisting the stricken market, but put in place an elaborate system that maintained the quality of the bills. This was thinking out of the box at its best and resulted in the pound being established as a world currency.

The Bank of England’s actions in 1866 are characteristic of our national identity.  At the heart of our most successful innovations is the need to solve problems and make our lives easier, but they are also driven by the intensely human desire to help, to connect with other people, and be part of the solution when the going gets tough.  That is why British innovation can continue to play a leading role and our most valuable currency is digital technology.

The opportunities that lie ahead in digital trade are ones we cannot afford to miss. If the UK is to thrive as an independent trading nation after leaving the EU, the government must do everything in its power to support a dynamic, innovative, and growing economy and be ambitious in scaling and export. Open banking can play an important role in helping our economy to grow and it is both dynamic and innovative.

There are now as many as 80 nations with open banking programmes, in consultation, design or implementation, and many of these have been inspired by the UK’s success . As with many parts of our fintech sector, we are particularly good at exporting thought leadership but do not always monetize it.

Imitation is the sincerest form of flattery, as we know. Our position as global leader in the open banking sector represents a real opportunity in digital trade and demand is increasing for UK expertise to share the ingredients which have made the implementation of our trusted open banking framework so successful.

With more than 6 million active users, currently rising by a million every six months, it is a framework which works for consumers and small businesses alike and has transformed the way that they leverage their financial data, take control of their finances and access better products and services. 

There are many factors to this success. Largely, it is down to an unmatched blend of world class talent, progressive regulation and a strong client base. It was also thoughtfully implemented. The Open Banking Implementation Entity (OBIE), mandated by the Competition and Markets Authority (CMA) in 2016, played an important role in making sure open banking was a success in the UK.  As an organisation, the use of an implementation entity was unique to this country, and it has done much to establish trust and allow third party providers to overcome challenges much faster than other European countries. 

One of the primary catalysts for this was the Kalifa Review, which signalled the UK’s high ambitions and recommended convening opportunities to unblock regulatory obstacles. The result is that the open banking model in Britain is the fruit of successful collaboration between the government and the private sector, with seed funding from HM Treasury. 

So, what is the future?

As we look ahead, one the biggest challenges the open banking sector faces is to ensure that the momentum is not lost. It would be a missed opportunity if the UK were not to leverage its current status as a world leader in the sector by not promoting its innovative leading fintechs as well as its own open banking model across jurisdictions and set the tone for the future of digital trade. 

In recent years, the government has supported the fintech sector by establishing ‘fintech bridges’ with other countries, to reduce regulatory barriers and support international expansion in a post-Brexit world. Whilst these have been an important step in the promotion of digital trade with other global jurisdictions, there is more that can be done to harness the full potential of the sector. 

The government should support our advanced UK open banking firms by facilitating access to other jurisdictions and markets and identifying trade opportunities that our Trade Missions can help promote. 

The UK has an open banking product and standard that is tried, tested and ready to go. It can and should be included as a key asset in future trade negotiations and the UK can offer the skills and expertise to build it in other jurisdictions. 

Because solid framework construction and trust lie at the root of our success. The ancient Romans were noted for their achievements in construction, and many of their arches are still standing to this day, having survived 2,000 years. To guarantee the quality of their constructions the Romans had an interesting practice. When they finished building an arch, the engineer in charge was expected to stand beneath it when the scaffolding was removed. If the arch didn’t hold, he was the first to know!

This is why the potential of what we have built in the UK is enormous. 

We at the OBIE are confident that our bridges are secure and if other jurisdictions are happy to learn from us, and continue to build connecting bridges, we will happily stand beneath them!  

We hope that as we continue along the road to a post-Covid recovery, looking for new economic growth opportunities, the government will show the same level of confidence and ambition in the huge potential of digital trade.

Charlotte Crosswell, Chair and Trustee, Open Banking Implementation Entity (OBIE)