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Industry Leaders Welcome UK Open Banking Expansion and Payment Tech Recognition

Fintech leaders have welcomed the UK government and regulator’s plans to develop a new entity and regulatory framework for open banking, saying it will help to build scale and expand the benefits of open banking to more sectors.

The UK government and regulators have confirmed that Open Banking Limited (OBL) will continue to lead the expansion of open banking as it transitions to a new entity, and as a new long-term regulatory framework is developed to replace the current CMA Open Banking Order.

The Joint Regulatory Oversight Committee (JROC), comprising HM Treasury, the Competition and Markets Authority (CMA), the Financial Conduct Authority (FCA), and the Payment Systems Regulator (PSR), recently published their vision for the future of open banking.

The CMA established OBL in 2016 to develop a shared API for the nine largest current account providers in the UK, allowing their customers to safely and securely share data with other financial service providers.

OBL is also responsible for monitoring the performance of these banks. With the CMA’s roadmap completed in January 2023, the new JROC roadmap will continue the development of open banking standards, and pave the way for expanding open banking into other financial services and sectors, benefiting millions of users.

UK ecosystem

Marion King, OBL chair and Trustee, said: “In just over five years, the UK’s approach to open banking has created a world-leading regulatory framework delivering competition, innovation and, most importantly, real-world benefits to seven million consumers and small businesses.

“JROC’s recommendations and other government initiatives will allow us to maintain momentum, and for the UK to extend the benefits of open banking into other financial services and sectors through open finance and smart data, benefiting millions more users.

“Now is the time to create a future entity and new regulatory framework that can build on open banking’s successes to deliver JROC’s priorities.”

Andrew Griffith, City Minister, said: ‘Britain leads the pack in open banking, with seven million users, but we can’t sit back and put our feet up. Today’s plan will deliver a new generation of products and services, making banking more accessible and convenient for millions of people.’

Industry reaction

Emma Steeley, CEO of Freedom Finance, a UK digital lending marketplace, welcomed the announcement, saying: “It is encouraging to see the commitment in this roadmap to building up scale which is pivotal to Open Banking becoming ubiquitous in this country.”

Meanwhile, Todd Clyde, CEO of payments provider Token.io, hailed the regulators’ recognition of non-sweeping Variable Recurring Payments (VRPs) in their roadmap for open banking. Clyde said that VRPs are key to unlocking richer open banking use cases, such as one-click e-commerce payments and subscription payments.

Clyde also said: “Today’s publication of the JROC’s recommendations is a significant milestone and opportunity for all open banking stakeholders in the UK. With other jurisdictions now also developing sophisticated building blocks for the future of open banking and open finance (including premium API schemes) the UK risks losing its position as an open banking world-leader.

“Banks, third party providers and regulators must now seize the opportunity to work together to take open banking to the next level and drive better outcomes for both consumers and merchants.”

What’s next?

The JROC will continue to work with industry participants, consumer and business representatives, and other stakeholders to deliver the plans under the five themes, in addition to the design of the future entity as set out in the recommendations.

It will monitor progress against all activities in the roadmap and publish a progress report in Q4 2023. Also in Q4 2023, the JROC will set out a detailed plan for the future entity and the OBIE’s transition to it.

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