OBL will lead Open Banking into a new era, UK regulators confirm

By Puja Sharma

The Joint Regulatory Oversight Committee (JROC), which is made up of HM Treasury, the Competition and Markets Authority (CMA), the Financial Conduct Authority (FCA), and the Payment Systems Regulator (PSR), published their vision for the future of open banking and their recommendations on the design of a future entity that Open Banking Limited will transition to, and new policy Roadmap.

The UK is already a global leader in the use of Open Banking technology and its success is tangible evidence of the benefits that the fintech sector in this country can deliver for consumers when acting in lockstep with the government, regulators, and the wider financial service industry.

Commenting on the update, Emma Steeley, Chief Executive of Freedom Finance, one of the UK’s leading digital lending marketplaces, said: “The mass adoption of Open Banking will improve financial outcomes for millions of financial services customers. “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. To achieve this, the ecosystem needs to increase competition by offering consumers the widest possible selection of providers, products, and services from the most reputable brands to deliver safety and choice.

“In the consumer credit sector, Open Banking is significant because the widespread sharing of transaction data can help lenders deliver more personalised and suitable products by using a far wider set of criteria to assess customers. This not only matches products with customers in a bespoke manner but increases access to the credit market by generating a far more accurate risk profile of a customer through an increasingly holistic assessment of their creditworthiness compared to the narrow parameters used to generate credit scores.

“For example, it means a person with a thin credit file through no fault of their own – like divorcees or expats returning to the UK – but posing no greater risk to lenders will not face exclusion from the market.

Open Banking Limited (OBL, also formerly known as the Open Banking Implementation Entity) was created following the CMA’s 2016 retail banking investigation. Its initial role was to create a shared API for the nine biggest current account providers in the UK, so their customers can safely and securely share their data with other financial service providers to achieve better financial outcomes across several banking products including current accounts and credit cards. OBL is also tasked with monitoring the performance of the nine banks.

Furthermore, the Economic Secretary to the Treasury confirmed that the first Centre for Finance, Innovation, and Technology (CFIT) coalition will be in the area of Open Finance.

Marion King, OBL Chair and Trustee said, “Today’s announcement by the Joint Regulatory Oversight Committee (JROC) secures the future for our thriving open banking ecosystem in the UK. 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.

“Five years ago, the regulators, the banking industry, fintech, and other consumer and business groups collaborated to create an approach that is replicated by more than 80 international regulators. This has reinforced the UK’s reputation as a global fintech center. 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.

“We would like to thank the Economic Secretary to the Treasury, Andrew Griffith MP, and JROC for their leadership, and the Strategic Working Group for their hard work in getting us to this point. We look forward to collaborating with our partners to deliver JROC’s vision in the coming months.”

Following the completion of the CMA’s ‘roadmap’ in January 2023, Today’s decision follows months of work by the government, regulators, and the financial services industry to begin developing work on the next stages of open banking. It confirmed:

• The FCA and PSR will lead in developing a future entity that OBL will transition to
• New JROC roadmap to continue the development of open banking standards
• Development of a new long-term regulatory framework that will build on the Payment Services Regulations and replace the current CMA Open Banking Order