Open Banking 'kick starts' Open Data future

The Open Banking Implementation Authority (OBIE) has published a report on the progress of the data sharing reforms, paving the way for expanding them into other areas of finance.

Research for the report, commissioned from Fingleton and the ODI, was carried out with stakeholder interviews among third party providers (TPPs), representatives of banks, the OBIE, Competition and Markets Authority and Financial Conduct Authority staff and consumer representatives.

The report stated that Open Banking has already kick-started an ecosystem of digital innovation, even though the banks have not yet completed implementation.

Some key priorities and recommendations for Open Banking identified within the report include improving payments capabilities and refund functionality, the development of Premium APIs and improving consent protections for consumers.

Echoing the recent Furman Review and the Smart Data Review, it also suggested that the platform and infrastructure have extensibility into other sectors and geographies – in particular, into the creation of an Open Finance ecosystem.

John Fingleton, chief executive of Fingleton (what does Fingleton do?), commented: “While great progress has been made so far, more is needed to guarantee that it takes off with consumers and business users – this matters for more than just banking: making a success of it here gives us a model for similar steps in other markets where customer inactivity or loyalty can leave people worse off.

“There are two ways to tackle the so-called ‘loyalty penalty’ – price controls and regulation that damages competition, or reforms that open markets up to competition and make it easy for customers across the market to access and act on the best deals for them.

“The Open Banking model applied to energy, telecoms, mortgages and insurance could eliminate the loyalty penalty in these markets while driving more competition and innovation for consumers, not less,” he added.

OBIE trustee Imran Gulamhuseinwala commented: “This report clearly demonstrates how far the Open Banking initiative has progressed, and the potential that exists to help create a banking market that better serves consumers and small businesses.

“Nonetheless, PSD2 is not a complete solution and we need to further develop the standards if Open Banking is to fully meet its objectives.” He went on to say that there is a “pressing need” to address refunds, Premium APIs and Open Finance.

Economic secretary to the Treasury, John Glen, said: “I look forward to seeing what the future holds for Open Banking, which is creating a banking sector that is more dynamic and competitive, whilst being more inclusive and effective too.”

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