The Competition and Markets Authority (CMA) is launching a new consultation on Open Banking in the UK, to determine the next stage of its development and governance.
This is likely to mean the creation of a new, more broadly funded organisation to replace the Open Banking Implementation Entity (OBIE), which was set up in 2017 to oversee the project and guide its expansion.
Open Banking was launched to the public in January 2018 following a CMA investigation of the retail banking market.
The core aim of the initiative was to create data portability for customers among trusted financial intermediaries, so that users could find products and services that better suited their needs.
In turn, this put competitive pressure on established High Street names, which had accounted for over 80 percent of the current account market for many years.
Banking and financial services now face intense competition from FinTech companies and mobile/digital challengers, as customers increasingly look for low-friction, high-speed services that give them greater control over their money.
New banking customers in particular favour mobile options, with the trend now increasingly towards depth, money management, and financial planning for all users, as well as speed and accessibility on the move.
Open Banking has been part of that broad consumer movement. Initial uptake was slow until the beginning of 2020, by which point just a million consumers had come onboard. However, it now has three million active users, with uptake spurred by the pandemic and by increased public awareness.
According to the government, more than half of all small and medium-sized businesses use tools that include Open Banking functionality. With roughly 99 percent of the UK’s six million companies being SMEs, that is a lot of customers.
With the implementation phase of the programme ending, UK Finance has proposed the creation of a new body to manage all aspects of Open Banking – except compliance monitoring, which will be handled separately.
The trade association is now seeking input on these proposals, especially on the question of the new body’s independence, accountability, sustainability, trust, and ability to act in consumers’ interests.
The consultation will run until 29 March 2021.