Open Banking ‘could be worth £18bn’

A new report has suggested that Open Banking could realise £18 billion value for people and small businesses in the UK over the course of a year, but also highlighted complex challenges ahead to realise this value.

The Independent Consumer and Small Business Representatives for the Open Banking Implementation Entity (OBIE) wrote to the implementation trustee of OBIE, the Competition and Markets Authority (CMA), the Financial Conduct Authority (FCA), the Treasury and the Department for Business, Enterprise, Industry and Skills (BEIS) and UK Finance to set out the need for action to ensure Open Banking delivers on its promise to make consumers better off.

The report stated that any of the most valuable Open Banking-enabled propositions are not yet available to consumers and there are a range of barriers which prevent these services coming to market today.

“Even where services are available, the past scandals of PPI mis-selling, combined with tech-giants’ questionable use of data, makes consumers wary about who they can trust,” it read. “They want to know that firms are acting with their best interests at heart in a way that is ethical and responsible.”

While there have been “some encouraging early signs”, the industry needs help to realise the full potential of Open Banking. The report set out how the government, regulators and industry can work together to deliver greater value for consumers, build a trustworthy ecosystem and stimulate the market to action quicker.

“For Open Banking to be a success, co-ordinated action by government and regulators is needed urgently to create a more holistic regulatory regime for data sharing in the UK,” the report stated. “If not, it could have unintended and harmful consequences, limit competition further or exacerbate financial exclusion.”

The FCA’s commitment to look at Open Finance, the promise of the Digital Markets Unit, BEIS Smart Data Review and HM Treasury’s review of the payments landscape could set the right path to securing better financial health for all consumers in the UK, added the document.

Independent consumer representative Faith Reynolds, said: “Managing money is at best a distraction and at worst stressful and anxiety-inducing – Open Banking offers a golden opportunity to reimagine consumers’ relationship with financial services.”

Independent SME representative Mark Chidley commented: “UK small businesses have suffered for too long from a lack of innovation, a lack of choice and a lack of tools to make them more effective; Open Banking can bring the impetus and new solutions which the sector has needed for so long.”

Imran Gulamhuseinwala, trustee of the OBIE, responded: “Open Banking is clearly showing promise and potential to make a truly seismic change in how people move, manage and make more of their money.

“Everyone in the Open Banking ecosystem now needs to play their part in seizing and scaling the opportunities that lie ahead.”

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