Insight Type: Thought Leadership

Celebrating milestones is always an occasion for reflection and recognition of progress made. As we marked the 10th anniversary of the Competition and Markets Authority (CMA) and the 6th anniversary of open banking, it’s evident that the UK’s financial landscape has evolved dramatically, with the UK at the forefront of innovation, competition and consumer choice.

Open Banking Limited (OBL) was created by the CMA to bring competition to the market, aiming to deliver more benefits to consumers and small businesses. And indeed, it has succeeded. While progress has taken a steady pace, the journey towards building a robust, inclusive, and sustainable smart data economy is well underway, with open banking laying down strong foundations for future schemes, growth, and societal benefits.

Our latest statistics underscore the impressive momentum of the open banking revolution. In March alone, the volume of API calls surged by 10.6%, with small businesses and consumers increasingly embracing smart data solutions. The number of payments processed saw a remarkable uptick of 15.5%, reflecting growing trust and adoption among users.

There were over 9 million active users of open banking in January, which grew to 9.48 million in March. First-time users exceeded 1 million a month, with 1.33 million new users in January and 1.39 million in March.

Marion King, OBL Trustee

Notably, HMRC’s collection of £3.5 billion in tax payments showcases the tangible impact of open banking, with a 16% increase from the previous year and a nearly 40% surge in transaction value.

Moreover, on the global stage, the UK maintains a substantial lead in open banking adoption, outpacing countries like Italy, France, Spain, and Germany by nearly five times. This international recognition was further solidified when Apple™* chose the UK as the inaugural country for integrating open banking with Apple Pay™, underscoring the UK’s pioneering role in shaping the future of financial services.

The recent release of the Smart Data Council’s Roadmap marks a significant step forward, extending the reach of smart data schemes beyond banking into sectors like telecoms, fuel, energy, pensions, and mortgage. This strategic move builds upon the success of open banking, unlocking new opportunities for innovation and economic growth that will benefit consumers, businesses, and the broader UK economy.

Central to this future are the Joint Regulatory Oversight Committee’s (JROC’s) recommendations for a future entity that is built on a commercially sustainable model. This entity will play a pivotal role in leading the way to deliver interoperability, inclusivity, competition, and potentially innovation across smart data schemes, ensuring a level playing field for all stakeholders.

As OBL Trustee, I welcome the clarity provided by JROC’s call for views on the design of the Future Entity, setting the stage for continued collaboration and investment in our world-leading ecosystem. It is imperative that we seize this opportunity to define the future of open banking in the UK, leveraging the collective expertise and insights of OBL and industry stakeholders.

The next stage in our journey includes the establishment of an interim entity to address non-CMA Order initiatives, alongside OBL’s ongoing efforts to maintain existing standards, continue to monitor performance, and promote innovation and develop the ecosystem further. This period of parallel-running will eventually lead to the long-term regulatory framework and the eventual transition to the future entity, ensuring the continued evolution of open banking and its extension into open finance and potentially beyond.

Crucially, this progress is made possible by the dedication and collaboration of government, regulators, policymakers, innovators, industry groups, and stakeholders, all committed to realising the vision of a data-driven economy that serves the public interest.

Open finance is the natural evolution of open banking, and it should, as with open banking, have the public good at its heart. By staying true to our principles of collaboration, transparency, and innovation, we can unlock the full potential of smart data, delivering lasting benefits to all sectors of society.

As we celebrate past achievements and embrace future challenges, I’m confident that together, we will continue to drive significant progress, shaping a financial services ecosystem that not only benefits individuals and businesses but also propels the UK towards sustained growth and innovation.

Apple and Apple Pay are trademarks of Apple Inc., registered in the US and other countries and regions.

Last Friday (12 April), Open Banking Limited held its inaugural regional visit in the North East of England ahead of UK Fintech Week. The visit, hosted in partnership with Sage UK, a leader in accounting, financial, HR and payroll technology for small and medium-sized businesses, brought together local fintech firms, business people, fintech experts, and local and national politicians. The visit was part of a wider programme of engagement to showcase the positive impact of open banking across the UK. 

Here is a round-up of the key themes that were discussed at the roundtable.  

Digitising SMEs 

Discussion focused on the importance of digitalising businesses, with a member of Sage UK’s team recognising that businesses that digitise usually do better. This was echoed by OBL CEO Henk Van Hulle, who noted that businesses that digitise themselves ‘as much as possible’ are more successful, and open banking has a role to play in that process. Henk also highlighted that one bank has around 42 use cases specifically relating to open banking — in the areas of pricing, credibility, improving risk, and affordability. 

We also touched on automation, late payments, the role of the government in regulation and innovation, and – critically – creating an atmosphere of trust. 

The importance of trust 

The team at Sage, Richard Newman, OBL Corporate Affairs Director, and Henk all raised trust as a key part of future innovation. The open banking ecosystem cannot thrive, innovate, and compete, without the trust of consumers and SMEs. Because open banking is a trailblazing industry where ‘nobody has been before’, trust is a necessity. In placing it front and centre of the work achieved so far, Henk noted that one out of every five SMEs now uses in open banking in some way. This has helped contribute to a 19% penetration rate – a ‘massive increase’. 

OBL – and the wider ecosystem – must continue to facilitate a culture of trust, helping to eradicate fraud and ensure trust is placed at the heart of innovation. Customer protection, identity frameworks, and commercial frameworks remain a key part of our future plans. 

Henk reminded the participants that our industry is only in its sixth year, highlighting the ‘amazing’ learning curve, where we are only ‘scratching the surface in terms of opportunity’.  

Interoperability 

The same applies to interoperability – in open banking terms, the ability to exchange data between different organisations via a common standard. This is a core principle of open banking, alongside transparency, assurance and accountability, and allows us to look beyond open banking towards open finance and to smart data.  

Appropriate regulation 

Throughout the discussion, there was a strong focus on the role of the Government in harnessing the right balance of regulation and innovation. The key principles to underpin open banking rely on both the legislative framework and the right regulatory environment, Richard noted it is incumbent on the Government to protect the end users and small businesses. Championing the notion that good regulation will drive innovation, he went on to state the right policies, frameworks, and proportionate regulation can help drive the adoption of open banking. 

Conclusion 

The visit was a fantastic opportunity to engage with an organisation that has fully embedded open banking into its service, and with the customers of that service, in addition to other regional stakeholders. It allowed OBL and Sage to demonstrate the achievements of open banking and where this relatively new technology can take us next. What is clear, is that the ecosystem continues to grow, develop, and innovate at every juncture. 

While there is room to grow and develop, it is clear there is no shortage of opportunities – and widespread support – for open banking to take a leading role in delivering a public good, supporting everything from SMEs to individual consumers. 

Attendees: Sage, North East CBI, North East FSB, Satago, Swoop, G W Dick & Co LLP, Sir Alan Campbell MP, Lord Chris Holmes, Sunderland Software City, Ecospend (Trustly), HM Treasury, The Journal. 

At OBL’s recent Parliamentary roadshow, MPs, peers, regulators, civil servants and members of the open banking ecosystem gathered to explore how smart data can be used to deliver the benefits of open banking across key sectors of the UK economy.

It also provided a chance for attendees to meet some of the shortlisted companies for the Department of Business and Trade’s Smart Data Challenge Prize. The challenge has called for ideas on cross-sector use case that harness data from one or more of the following five sectors: energy, financial services, home-buying, retail and transport.

The event included a panel conversation, chaired by John Penrose MP, on the future of open banking and its evolution into smart data. The Data Protection and Digital Information (DPDI) Bill was also a key topic as it will enable the creation of smart data schemes and help kickstart the Government’s  ‘Smart Data Big Bang’. This aims to see the expansions of open banking data to seven additional economic sectors, the five listed above, along with banking and telecoms.

The panel comprised:

Launching the discussion, Penrose commented on the status of the DPDI Bill, expressing optimism that, when the Bill is given a date for the Committee stage in the House of Lords, it will pass with cross-party support. However, Penrose pointed out that while open banking is in a good place in the UK, “we can’t afford to sit still”.

We need “an investable timetable” of the rollout of smart data sectors, and for a central standards-setting body.

John Penrose, Conservative MP for Weston-super-Mare

Counting 9m+ active users

King celebrated the successes open banking has had in its first six years, announcing the latest adoption and payment statistics: 9 million active users and 14.45 million open banking payments made in January 2024. She paid tribute to the efforts of the ecosystem to get this far, citing it as an example of collaboration in action among a large group of industry stakeholders.

However, she added that OBL is now planning for transition that will take us beyond the [CMA] Order and help to unlock the full potential for open banking.

Charlotte Crosswell and Stephen Wright cast their eyes beyond the next step and focused on the long-term development of a smart data economy. Both highlighted the urgency in setting data standards to enable the ecosystem to innovate and open up the economy.

The UK still has a tremendous opportunity to lead some of this innovation and send the open banking providers here out into the world and take our scientists out into the world. But let’s get there quicker”.

Charlotte Crosswell, CFIT Chair

Crosswell added that it is data that will “unlock better outcomes for consumers and SMEs”.

Minister Kevin Hollinrake was confident that the Government would progress the DPDI Bill and fulfil its potential by implementing smart data schemes. To achieve this, Hollinrake made clear the system must be interoperable, a point King was also keen to press. Yet alongside this, he also made it clear he wanted to see HMT move more quickly on legislating for smart data.

International competition

A recurrent theme for the panel was the importance of the UK maintaining its lead in open banking, and setting data standards on the international stage. Penrose asked the panel to name the countries they perceived as the biggest threats.

The US, with its sizeable internal market, is rapidly catching up with the UK, with the country’s Consumer Financial Protection Bureau legislating for the acceleration of open banking to an audience of 150 million people. The panel also cited emerging markets such as Brazil and India, which are beginning to collaborate on cross-border data standards. Any one of these countries has the potential to become the global standard for data sharing, and as Crosswell pointed out, “no one is stopping at borders”.

In order for the UK to maintain its strong lead in smart data, Wright and Crosswell were adamant that a future roadmap should be led by industry, taking a use case approach guiding the way to a smart data economy.

Hollinrake made the case that it was the Government’s role to liberate the data to “drive down prices and drive up service”, then step back and enable competition within the ecosystem to drive further innovation.

King agreed with the Minister, stating that the future entity will help facilitate the liberation and interoperability of data, to allow innovation among the ecosystem to flourish.

It’s clear that, despite lingering concerns about the Joint Regulatory Oversight Committee’s (JROC’s) pace of progress on the future entity, and the temporary pause in legislation, the industry’s ambition, appetite and ability to deliver wider economic growth remains undiminished. The shortlisted start-ups in the room were evidence that the UK is well on its way towards a smart data economy. Indeed, the DBT estimates that commercial opportunities created by personal data mobility have the potential to increase GDP by £28bn. That’s a prize worth waiting for.

This is a pivotal year for both open banking and Open Banking Limited (OBL). It will also be a year of change as we begin to move beyond the CMA Order to a sustainable commercial model, and expand open banking beyond the current regulatory baseline to unlock open banking’s full potential. As Trustee, I welcome the Payment System Regulator’s (PSR’s) ambition to pilot the first ecosystem-wide expansion of this nature.

The pilot to extend variable recurring payments (VRPs) is an essential first step to achieve this. This pilot will be essential in helping to develop the capabilities and expertise in the future entity that will support the new delivery model envisaged by JROC.

I fully support the PSR’s ambition to move us another step closer to unlocking the potential of account-to-account payments as an alternative to cards and the desire to do so at pace.

It is essential that the pilot is established so that we can learn from it and apply those learnings in the future so that it provides good foundations and a pathway to successfully expanding open banking in the future.

As open banking Trustee, I have set out a response to the call for views on the development of VRPs and the proposed pilot. This includes suggested modifications to the PSR’s proposed approach which I consider will improve the prospect of attaining the long-term objectives that both JROC and the industry want to achieve.

Marion King, OBL Chair and Trustee


Key points include:

I am grateful that the PSR has consulted widely on this proposal and is building on the work of the industry-led VRP Working Group that delivered its report last year. It is essential that the follow-on activities deliver against JROC and industry aspirations for open banking.

I thank all those participants and stakeholders who have contributed their expertise and considered views to the consultation so far, and encourage you to continue to participate in this process. Your engagement and feedback are essential in influencing the future of open banking in the UK.

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As OBL, and open banking, looks ahead to what will be a pivotal year, we cast an eye into the future to see what changes 2024 will bring, and asked the Parliamentarians, ecosystem and industry leaders to share their predictions for this financial innovation. We summarise their contributions below, and you can read the full article here.

As the Data Protection and Digital Information (DPDI) Bill makes its way through Parliament, John Penrose, Conservative MP for Weston-super-Mare, suggests that while the bill does many welcome things to equip the UK for a data-driven world, “The block of smart data clauses are the ones that matter most for our economy. They build on the foundations of our world-leading position in open banking, so we can extend the same approach quickly into other industries too.”

Lord Iain McNicol of West Kilbride comments that: “We need to go faster and further in championing smart data and open banking, which can be achieved through schemes that allow consumers to make better decisions, and enable innovation.

One of the most effective areas of smart data is open finance; through the expansion of provisions into new areas, it will have a greater social impact, and be a true public good.”

Gavin Starks, CEO of Icebreaker One, adds that: “The UK stands at the forefront of delivering a trusted smart data economy, one that not only protects but also empowers individuals, communities, businesses and society. In 2024, by harnessing our collective success, industry experience and policy leadership, we can deliver tangible economic, social and environmental impacts.”

Open data delivering financial benefits for consumers

Tim Rooney, CEO and founder of alternative lender Salad Money, highlights the continued importance of open banking data as part of accurate, more inclusive credit assessments. He adds that the Salad Money is “using open banking to improve access to fair financial products by offering those who may have been excluded by mainstream lenders a different route into fair, affordable credit”.

Scott Mowbray, Cofounder and CMO of money management Snoop, explains how open banking apps will continue to help consumers make more informed financial decisions by providing easier access to information and promoting better financial habits through the intelligent use of data.

Supporting cost savings for businesses and the public sector

At the Federation of Small Businesses, Policy Chair Martin McTague believes open banking has the potential to help small firms become more efficient, by putting their financial data in one place, streamlining tasks such as processing payments, and highlighting financial concerns before they snowball into serious problems.

Jon Bellamy, Senior Partnerships Manager at Xero, points out that digital bank feeds are one way small firms can save time on manually uploading bank statements, while having bank transactions flow directly into accounts software can provide up-to-date data on cash flow that can inform business decision-making.

In terms of the public sector, James Hickman, Chief Commercial Officer at Ecospend, anticipates that the implementation of the Crown Commercial Service’s open banking dynamic purchasing system will help many other government departments to access open-banking driven efficiencies and cost savings.  

Industry and regulatory collaboration is vital

“The Government must provide industry with a clear vision for the future and encourage better collaboration between all parties to accelerate innovation and competition to deliver consumer and business-focused offerings. This will require a sustainable and equitable commercial model.”

Stephen Wright, Head of Regulation and Standards, Bank of APIs NatWest

Fliss Berridge, Co-Founder, Ordo, believes there is a clear desire to catalyse a sustainable model for open banking innovators, and that there are several firms – including Ordo – that will be ready and able to a pilot of premium APIs for VRPs live by 1 July 2024 – as requested by the Financial Conduct Authority and Payment Systems Regulator.

Finally, we hope that our own work with the Smart Data Council will continue to progress wider regulatory initiatives that will deliver the benefits of open banking to other economic sectors such as energy, transport, telecoms, home-buying, and retail, taking open banking beyond a competition remedy to deliver a true public good.

Read the predictions for 2024

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.

"A world-leading payments environment is vital for a world-leading economy, and 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." Marion King, Chair and Trustee, OBL

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

1 December 2023 – Small Business Saturday highlights the remarkable successes of small businesses up and down the UK. It encourages consumers to ‘shop local’ and support small businesses in their area. Many of these businesses are suffering due to cost of living challenges, however, the open banking revolution is making it easier for them to make cost savings as Kevin Hollinrake MP, Minister for Enterprise, Markets and Small Business confirms.

Minister Hollinrake said: “The UK’s small businesses are the lifeblood of our economy, playing a vital role in providing jobs and economic growth. Small Business Saturday is a chance to highlight the inspiring work of our small businesses and celebrate their success.

“Those firms using open banking-enabled services are able to make cost saving efficiencies through reducing late payments, managing their real-time cashflow, accessing cost-effective finance, and streamlining business administration. Open banking is an example of how innovative tech-based solutions can make a real difference for our hardworking SMEs.”

Kevin Hollinrake MP

Small businesses continue to lead the way in open banking adoption, with a record high of 17% of firms now making use of the innovative technology, often through cloud accounting software. The rapid rise in adoption is testament to the power of open banking technology to empower innovation, create efficiencies and reduce costs.

Sometimes, going to America feels like you’re going back in time. You finish your meal in a restaurant, you get the bill and suddenly your bank card is spirited away to be swiped (although not always!). Here in the UK, signing receipts was replaced by chip and pin, which was, in turn, replaced by contactless payments. Now we are on the road to widespread adoption of open banking as a next-gen way to pay, and taking the next step in that journey.

The UK has always been a leader in financial innovation, and open banking is no different – 11% of consumers and 17% of small businesses are already using this powerful financial technology. We know that the average value of an open banking transaction is around £450, taking the total value of open banking payments to around £4.5bn each month. The first six months of 2023 saw double the volume of payments compared with the same period last year.  And a record 9.7m payments were made in June 2023, up 87% on the same month in 2022. 

This is a huge amount and vital to the future of the UK economy. On Black Friday and Cyber Monday, when it is predicted that over half of UK adults will spend £3bn in shops and online, understanding whether this new technology is safe is a pertinent question.  

“Open banking is a safe and secure way for consumers to spend and transfer money. It was designed with protection in mind - it uses the banks’ own secure systems, and there are robust and constantly evolving protections to spot fraudsters.” Richard Mould, Senior Policy Manager, OBL

Payment protection

The categorical answer is yes, open banking is a safe and secure way to spend and transfer money. Firstly, it was designed with protection in mind. Fingerprints, passcodes or face scans are used to ensure only an authorised customer can make the payment, and all the details are shown in the customer’s own banking app.

Secondly, the Financial Conduct Authority (FCA) has regulations to ensure that customers are protected if something goes wrong with any bank payment – not just open banking. As open banking uses the banks’ own secure systems, there are robust and constantly evolving protections to spot fraudsters. For example, your bank might use geolocation checks, and ‘value and velocity monitoring’ (checking the value of transactions and the speed at which a consumer tries to make multiple purchases).

Some consumers may view these as extra and unnecessary steps that can slow down purchases, but safety always needs to be a top priority and the speed is such that most people won’t even notice.

Purchase protection

Open banking is a safe way to pay but how do you know the person you are paying is legitimate? Again, legislation comes to our aid as the Consumer Rights Act requires merchants to treat customers fairly.    

However, when buying things online, consumers need to treat these purchases in the same way as they would in the physical world. If it seems too good to be true, then it probably is! Do you trust the person you are sending money to? Does the website look genuine? This is why it is always best to only buy from trusted suppliers. Card payments do have additional protections, but often these can only be accessed after you to resolve the matter with the retailer. Card protections do incur extra cost for the retailer, which can end up being passed on to you, the consumer.  

Just because open banking is new, it doesn’t mean that it doesn’t have functionality that consumers know and trust – like the familiar Direct Debit guarantee. It is simply a new journey for payments, that results in the same, safe outcomes. 

Last week’s Open Banking Expo in London once again highlighted the remarkable work of the open banking ecosystem in the UK, and beyond. Some of the key themes this year included the UK’s Open Banking Standard and the positive example that it provides to the rest of the world, the importance of trusted frameworks and accessible data. Keynote speaker Lord Holmes advocated for open banking for the public good, and pointed out that: “It is all about the data – that’s the golden thread for open banking, open finance and artificial intelligence.”

For the first time, Open Banking Limited (OBL) supported the ‘Future Stage’ which provided us with the ideal platform to showcase the potential of open banking and how it can deliver benefits across financial services and other economic sectors such as energy, retail, transport, telecoms, water and more.

On the second day, we published our latest Impact Report. Report authors, Richard Koch, OBL Senior Policy Lead, and Daniel Jenkinson, OBL Policy Manager, shared the unique insights on open banking availability and adoption on the Expo’s Main Stage. The report detailed that over 1 in 9 (11%) of British consumers are active users of open banking, along with 17% of small businesses. For consumers, growth in use is driven through open banking apps – most recently, lending propositions and tax apps – while business growth is driven via data, primarily through accounting.

This growth is also evident through the number of payments, which increased by 88% in June of this year to 9.7 million compared to the same month in 2022, and the upwards trajectory continues with further growth of 10.8 million payments made in August. For the first time, additional data from Pay. UK showed that the total monthly value of open banking payments is sitting at around £4.5 billion – a game changer for how payments are made in the UK. While these statistics highlight the progress that has been made in open banking, the team pointed out the importance of unlocking access to all services to drive further uptake and cross-sector collaboration.

“Regulatory pause“

Elsewhere, OBL CEO Henk Van Hulle vigorously refuted any notion that the UK is ‘losing its open banking crown’, reminding the audience that the UK built a well-trusted Standard and ecosystem in just five and a half years, adding that it is taking a “regulatory pause” to learn from other jurisdictions before it accelerates again. He predicted that we will see payments double in just two years.

He praised regulators for the progress so far but urged the industry to step up to make the future of open banking happen, emphasising the need for the Data Protection and Digital Information Bill (DPDI) (currently in report stage) to be passed into law next year.

Heather Xiao, OBL Product and Operations Director, discussed the challenges related to data reliability from multiple sources and praised the UK’s Open Banking Standard and trust framework which helps to ensure the ‘secure’ data sharing within the open banking ecosystem. She also advocated for business models to prioritise customer value and superior experiences.

Consumer protection
Consumer education and protection were consistent themes throughout the two-day event, with near-universal agreement that more needs to be done on both scores.

Richard Mould, OBL Senior Strategy Lead, spoke about this on the lively consumer protection panel, likening the current situation to having two buckets: one for purchase protection, for example, if you’ve ordered red trainers and received blue ones, and one for payments protection, when something goes wrong with the payment, for example, if the funds were sent to the wrong account.

He said there is protection through existing regulation for the former, but that the industry needs to “sort out the plumbing between banks and third party providers”, adding that the Direct Debit guarantee was a good example of how this could work. The former is a policy decision, and we need to think carefully about where the risk lies, how the risk can be controlled and who pays for the protection.

“VRPs are good for everybody”

As with previous Expos, variable recurring payments (VRPs), the pioneering payment instruction, continued to be a hot topic. Jane Moore, Head of Department, Payments and Digital Assets, at the Financial Conduct Authority said that “VRPs are good for everybody” – merchants and consumers – as they increase competition between payment systems, and allow merchants to price goods better.

NatWest added that the industry needed to give customers the confidence to click on a VRP and urged other banks to get on board with commercial VRPs. There was broad (but not universal) agreement that while VRPs are an enabler to escalate growth, and to create an API economy, they need to be mandated across the board.

Overall, the Expo provided a valuable opportunity for members of the open banking ecosystem to meet and discuss the future of open banking as it continues to evolve. It was even suggested that next year the show is re-named to ‘Open Finance’ or ‘Open Everything Expo’!

Since the introduction of the Gambling Act 2005, there has been significant change in the way people gamble, with most now gambling online or through mobile apps. This ease of access has led both the industry and government recognise the need to move with the times to protect vulnerable customers and promote safer gambling.

Earlier this year, a review was launched to ensure that gambling regulation can rise to the challenges and opportunities facing the evolving industry. The resulting White Paper sets out how to regulate the gambling industry in the digital age by presenting comprehensive new measures aimed at making gambling safer while still ensuring consumer freedom.

Problem gambling and indebtedness is an understandable concern for policymakers and the industry. One academic research paper has found that when an individual increases their gambling spend by 10 per cent, what often follows is an increase in the uptake of high-cost payday loans, an increase in credit card use, and an increased likelihood of missing a mortgage payment.

It’s clear that for betting companies to analyse new and existing customers, affordability checks are crucial for safer gambling as they assess a player’s financial capacity before the point at which they allow significant bets to be placed.

Open banking offers a simple, fast and effective way to do this – by allowing for secure use of a customer’s transactional data (with their consent), gambling companies can have a clear picture of an individual’s financial position. We’re pleased to see that the Government’s White Paper has identified open banking technology as an effective solution to affordability checks.

Traditional gambling credit checks are often insufficient in making accurate affordability decisions, and are viewed as arduous and invasive, requiring the production of multiple physical documents such as bank statements and payslips. Open banking-driven checks are frictionless and quick for both customers and operators.

They allow operators to verify the customer’s identity and match their account to the details submitted, providing a comprehensive and accurate view of their finances in near real-time. The benefits are two-fold: consumers can self-impose gambling blocks to prevent further payments to gambling operators, while the companies themselves can set accurate spending caps for that individual.

The real-time data can also recognise and highlight patterns of potentially destructive spending behaviour. A leading online bank has successfully employed a gambling block for its customers, an optional tool which blocks any gambling-related activity until that customer opts to speak to a support team adviser.

One open banking third party provider (TPP) which operates in this space has also developed a pilot platform which can tackle ‘multi-operator problem gamblers’ whereby customers regularly use accounts across several operators – giving gambling companies an earlier and more effective opportunity to build a comprehensive view of the customer’s accounts and offer pastoral support earlier in the gaming journey.

As well as ensuring responsible gambling for consumers, open banking technology can potentially be used to tackle anti-money laundering by providing a complete and accurate view of those opening accounts and pinpointing other accounts they may be opening simultaneously.

A spokesperson for the TPP said:

From our perspective, we’re seeing manifold benefits for gambling companies from the secure access to detailed data that open banking allows – whether it’s combating illegal, fraudulent activity; bonus abuse by botting; or addressing and helping problem gambling.

“The UK Gambling Commission is working on a ‘Single Customer View’ project to share information between operators (as well as other changes), but our worry is this is not going to go far or fast enough. Pinpointing single factors like source of wealth is not sufficient.

“Additional products can crunch data on individuals, behaviours and signifiers allowing the attribution of flags and risk levels to players – both for their own and the operator’s benefit. The value of this increases exponentially once you look across multiple operators.”

It’s clear that open banking technology can play a key role in both providing protection for gamblers and tackling fraudulent activity. By leveraging this technology, legislators can enact measures that promote responsible gambling and safeguard individuals from harmful behaviours and misuse of their products.

Legislators could stipulate that operators utilise open banking insights to provide tailored responsible gambling interventions. We are keen to see – and support – future collaboration between gambling providers and the open banking ecosystem.

Incorporating open banking into gambling regulation underscores a commitment to consumer protection and anti-money laundering. It will enable regulators to foster a safe, secure and more responsible gambling environment while allowing individuals to gamble safely within their means.

Richard Newman, Director of Corporate Affairs, Open Banking Limited.

London, UK, 21 September 2023: Open banking technologies – such as variable recurring payments for sweeping (VRPs) – are key to maximising the unrealised potential of savings this UK Savings Week, said Open Banking Limited CEO Henk Van Hulle. In a climate of cost-of-living pressures where households are feeling the squeeze, the need for smarter saving has never been greater. VRPs for sweeping personalise saving for consumers and businesses alike, finding ways to cut costs and manage finances more effectively.

VRPs are revolutionising the way we save. By allowing businesses and consumers to take control of their savings, VRPs allow us to save smarter and harder.

OBL CEO Henk Van Hulle.

As households grapple with how and where to save in the face of cost-of-living challenges, the benefits to consumers are clear. Open banking apps can tell you if you’re spending too quickly, and where you have spare cash to save. By ‘sweeping’ surplus funds from current accounts to interest-generating savings accounts, or by rounding up small amounts of change from shopping bills to add to a savings account, VRPs can unlock smarter savings for thousands of Brits.

As Savings Week comes to a close, the arrival of VRPs for sweeping can also be a game-changer for businesses. By setting up an instruction to monitor their business current account, every time the balance goes over a certain amount, that money could be swept into a business savings account maximising the potential of critical revenue. Against a backdrop of interest rates having risen steadily since December 2021, this could deliver a welcome boost to business finances, with minimum effort, as well as help firms to pay their taxes by setting money aside at the point of invoice collection.

Van Hulle added: “The ground breaking Digital Data Protection and Digital Information Bill, currently making its way through Parliament, will capitalise on the foundational work of open banking to fully unlock a smart data revolution. By opening up competition across a number of key economic sectors, smart data will create benefits to consumers beyond smart savings to the likes of energy, telecoms and more.

“As we look to a future of open finance and smart data, we encourage non-mandated players to continue to take up the opportunities provided by open banking in order to continue providing the best services for their customers.”

For more information, or to organise an interview, please contact Samantha Boyle at Atticus Partners on sboyle@atticuscomms.com

Notes to editors:

1. Open Banking Ltd (OBL) was set up by the CMA9 in September 2016 as required under the Competition & Markets Authority’s (CMA) Retail Banking Market Investigation Order 2017 to fulfil one of the remedies mandated by the CMA following a market investigation into UK retail banking.

2. The CMA’s investigation into the retail banking market (whose findings were published in August 2016) concluded that older and larger banks do not compete hard enough for customers’ business and that open banking should deliver a new, secure option for customers to be able to compare the deal they are getting from their bank.

3. OBL’s role is to:

• Enforce the obligations on the CMA9 under the CMA Order.

• Design the specifications for the application programme interfaces (APIs) that banks and building societies use to securely provide open banking.

• Support regulated third party providers and banks and building societies to use OBL’s Open Banking Standards.

• Create security and messaging standards.

• Manage the OBL’s Open Banking Directory which allows regulated participants like banks, building societies and third-party providers to enrol in open banking.

• Produce guidelines for participants in the open banking ecosystem.

• Set out the process for managing disputes and complaints.

For more information, or to organise an interview, please contact Samantha Boyle at Atticus Partners on sboyle@atticuscomms.com

OBL spokespeople are available on request.

Open banking is a necessary and important solution which can help us navigate the cost-of-living crisis.

Open banking-enabled products offer practical tools which help people to manage their money better and, in some cases, can even help alleviate associated mental health problems.

For small and medium-sized businesses, they can help support increases in productivity. But if we’re going to deal with the root cause of cost-of-living challenges in the UK, we need to move to smart data, and move sharpish.

The impact of the cost-of-living crisis is well-documented: inflation rose to a 41-year high in 2022 to 11.1%. The Trussell Trust reported a significant increase in the provision by food banks, and a series of interest rate rises has led to significant increases in housing costs.

The impact is felt most among people on low incomes and with debt. Covid had a disproportionate impact on people in poverty, especially those from certain ethnic groups and women. Cost of living challenges have exacerbated those inequalities, highlighting the importance of giving people tools to help build resilience.

Apps can help the financially vulnerable

A recent study commissioned by Urban Impact on Health shows how useful a variety of open banking apps can be in helping people in vulnerable circumstances understand their financial situation better. Many users reported greater clarity, reduced stress and feeling more ‘grounded’. 

Over £16m goes unclaimed in welfare benefits each year. One fintech platform uses technology to calculate benefits, and has integrated with a leading retail bank to help people access the benefits they’re entitled to. There are other apps which can help people find local grants and other support.

One alternative lender reports that it has been able to lend more than £4m to more than 3100 customers who do not have a credit score and would otherwise be excluded from borrowing. Open Banking Limited’s research highlights the importance of savings apps in creating new savers, and how small businesses are using open banking to improve efficiency and make better decisions.

“Data is central to better decision-making, planning, investment, and prosperity. Open banking has been a proud export. It’s doing good for people – and for businesses. But how much more could be achieved through open finance and smart data?” Faith Reynolds, Independent Strategic Adviser

Raising awareness of tools

But, as the Urban Impact for Health study highlights, more needs to be done to communicate the availability of tools. Many people are still unaware of what’s out there and how the different options can help them. It’s here that ecosystem participants can do more to embed complementary services and signpost effectively. Collaboration is essential.

The cost of housing was also mentioned by participants in the Urban Impact for Health report: “Addressing challenges with housing and earning enough to meet monthly bills were central to many of our participants’ financial, physical, and psychological well-being – ‘you can’t budget your way out of poverty.’”

We won’t solve these underlying issues of inequality without systems change – which looks at moving the relationships to deliver against different goals and outcomes. Widening open banking to smart data and moving towards a more data-driven society is essential if we want to grow economic wealth and reduce inequality – including the regional disparity in wealth.

Sharing energy data

Energy data initiative IceBreaker One learnt from open banking to create a trust framework that would allow stakeholders to share a variety of energy-related data. Its focus was on enabling organisations to share data to retrofit a housing estate to improve energy efficiency and reduce costs for the community of people living in those houses.

In the past, we’ve tended to view the benefits of open banking and open finance through an individual lens: how does it help individual consumers and individual firms? Now, it’s time to re-frame: how does opening up data help us as communities, regions and the UK as a whole? 

Data is central to better decision-making, planning, investment, and growing prosperity. Open banking has been a shining light, a proud export. It’s doing good for people, and for businesses. But how much more could be achieved through open finance and smart data?

Faith Reynolds is an Independent Strategic Adviser on fintech, open banking, open finance and smart data.