The UK is set for the next phase of incorporating Open Banking into its financial ecosystem, at least in a regulatory sense, after the Competition and Markets Authority (CMA) confirmed the completion of the final Roadmap for Open Banking.
All nine banking providers manded by the CMA under the Retail Banking Market Investigation Order have now completed the roadmap, proving they have the required functionality to offer Open Banking payment and account information services.
Danske Bank, Bank of Ireland and Allied Irish Bank are the final three firms to complete the roadmap. These firms join HSBC, Barclays, Royal Bank of Scotland, Santander, Lloyds and Nationwide as the large UK financial institutions required by the CMA to allow startups to access data for Open Banking purposes.
Open Banking Ltd, the implementation entity for Open Banking established under the CMA Order in 2023, has praised the completion of the roadmap as preparing the UK for what it calls ‘the next phase of financial innovation’.
Henk Van Hulle, CEO of OBL, said: “The rollout of sweeping functionality across all the CMA9 is a crucial step in extending the benefits of Open Banking to a broader range of customers.
“As we look ahead, the next exciting chapter will involve exploring the potential of commercial VRPs, which have the capacity to revolutionise the way businesses manage payments.
“We are eager to see how third-party providers will harness this new capability to drive further innovation in the financial sector.”
Many observers believe that the UK has secured a leadership position globally in terms of Open Banking development and adoption, though the Nordic markets have also been a traditional stronghold for the technology.
The Conservative government, particularly under Rishi Sunak, had focused heavily on financial and technological innovation as a growth generator in the British economy.
This approach too is favoured by the now-governing Labour Party, which addressed Open Banking and Artificial Intelligence (AI) in particular in pre-election policy documents and in its election manifesto.
The initial CMA order and the completion of the roadmap by the first six banks came under the Conservative administration, in 2017 and 2023 respectively.
The final completion occurring under Keir Starmer’s Labour government shows that the potential Open Banking has for the British economy continues to be recognised on both sides of the political spectrum.
Dan Turnbull, CMA Senior Director, added: “Today’s update is an important milestone. The completion of the Roadmap cements the move to the future of Open Banking, one that can expand the benefits of Open Banking beyond the scope of the CMA’s Order. OBL’s work is vital to the ongoing success of Open Banking.
“We look forward to continuing to work closely with the FCA, PSR and HM Treasury to help deliver the future arrangements for Open Banking.
“As we move towards this future, we will continue to ensure the standard is maintained and that the nine banking providers are held to their ongoing obligations under the CMA’s Order.”
The government, the regulators and the industry are all hopeful that the UK can maintain a strong standing in Open Banking. This comes against growing competition in the likes of Australia, the US, India and in the Nordics.
An area of difficulty may be in persuading consumers of the benefits of Open Banking, due to many being understandably concerned about sharing their data. On the other hand, Open Banking has been enjoying rising adoption in the UK, with 11.32 million users as of July 2024 and 19.54 million payments made in this same month.
The completion of the CMA’s roadmap comes shortly after the UK government ordered the creation of a taskforce to take Open Banking to the next stage. The taskforce is chaired by the Centre for Finance, Innovation and Technology (CFIT), and is focusing on how access to data can benefit Britain’s SMEs.
Responding to the news of the roadmap completion on LinkedIn, CFIT described the development as a “milestone” which will set the stage for Open Finance, whilst its Chair, Charlotte Crosswell OBE, stated she is “looking forward to what comes next on the UK’s journey to smart data”.
“With the rapid adoption of Open Banking by millions and the upcoming Digital Information and Smart Data Bill, the UK is solidifying its position as a global leader in Open Banking,” CFIT’s response continued.
“At CFIT, we’re excited to continue building on the foundations laid by our first coalition and the CFIT-chaired SME Finance Taskforce, focusing on Smart Data, and driving forward innovation and collaboration in finance as the UK leads the way in the digital economy.”
The potential of Open Banking for the igaming industry will be discussed at the Payment Expert Summit, part of the SBC Summit, between 24-26 September.