How Do We Get There? UK Open Banking Experts Reflect On JROC

April 28, 2023
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As the dust settles on the UK’s Joint Regulatory Oversight Committee’s recommendations, a VIXIO-hosted webinar discussed commercial models, consumer protections and other issues impacting the future of open banking.

As the dust settles on the UK’s Joint Regulatory Oversight Committee’s (JROC) recommendations, a VIXIO-hosted webinar discussed commercial models, consumer protections and other issues impacting the future of open banking.

It is undeniably a busy time for the payments industry in the UK. JROC has now released its report on the future of open banking and the Centre for Finance, Innovation and Technology (CFIT) has announced a focus on open finance, while the UK government’s consultation on the Payment Services Regulation has recently closed.

JROC in particular sets out an ambitious timeline, targeting a transition beyond the implementation entity’s work later this year.

“We are very supportive of the scope of the JROC report,” said panellist Nilixa Devlukia, chair of the Open Finance Association.

"It is very positive that there is now clarity that there is a need for legislation", she continued, noting that the Data Protection and Digital Innovation Bill will be the vehicle for this.

“We have clarity that the current Open Banking Implementation Entity has a mandate to progress with non-order items, and we’re hopeful that it will progress the items that are detailed in the report that are of concern to our members and third party providers generally about unlocking functionality and fixing the problems in the open banking ecosystem” she said.

Further, she stressed that it is “key” that industry and regulators work in close collaboration with one another.

“That is the only meaningful way that we will deliver to the timelines and ambitions within the report,” she said.

Gavin Punia, a partner at Bird & Bird law firm, welcomed the fact that JROC sees the need for commercial models to be in place.

“This means that account providers can come to the table and have some incentive to provide more dedicated APIs, and APIs for particular use cases, to provide access to TPPs in a better way,” he said.

Devlukia agreed that a focus on commercial models is “absolute right”.

“We need the right incentives in the ecosystem to take this forward,” she said, noting that the industry is in conversation on this matter.

There is also a need for caution: “When we discuss API performance, this cannot be limited to commercial models,” she argued.

“We need to have a very clear baseline, because we have a regulatory framework, and what is currently lacking is not poor performance in commercial models, it is poor performance.”

This needs to be addressed, the former regulator said.

“We must not have the commercial conversation at the expense of, in effect, what we call a baseline,” she said. “Where functionality, per se, has to be good, and the commercial functions are an add-on to that.

Punia added that a focus on consumer protection was another area that the JROC had got right.

“If we want to drive better adoption, whether that is from an account information data perspective or an account to account payment perspective, consumers need to see that there are protections around how they purchase goods and services,” he said.

He added that there needs to be similar protections to card payments, where there are chargebacks.

Speaking for OFA, however, Devlukia said that the membership are “cautious” about replicating what exists in the card space.

“We need to have the right consumer protections for account to account payments and open banking payments. It is not for us a given that we replicate what is consumer protection in the card system,” she said.

Andrew Self, policy manager at the UK’s Payment Systems Regulator, meanwhile stated that in light of the report being published the regulator now “genuinely want[s] to see this move forward”.

To have retail transactions happen via open banking, performance and functionality need to be beyond where they currently are, he said.

“I think we have set out quite an ambitious plan for the next phase of open banking,” acknowledged Self.

Self continued that the regulators have tried to set out a “three-step, staged approach” to the next phase of open banking.

“In the near term, we want to see those things where there is broad industry consensus moving forward and being deployed.”

This includes better data in terms of API capability and fraud.

“Where there is genuine industry consensus, effectively, let us just get on with it.”

There are also “interim” deliverables in the JROC paper, highlighting where there is still contention in the industry.

“Particularly for lower risk use cases, we want them to be enabled,” he said.

For example, this means bringing forward use cases such as "variable recurring payments" (VRP).

“We see that as a stepping stone towards that long-run, sustainable framework for open banking,” he said.

“We want to learn and understand, through that interim step, what needs to happen to make the long-run framework.

Here, he listed topics such as dispute processes and liability frameworks and ensuring that the availability of APIs is there.

“Let us work through these stages to make sure that we get each of these things lined up by the time that the industry enables open banking across a wide variety of use cases,” he said.

If you missed it, you can catch up with VIXIO’s webinar here.

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