UK Open Banking Will Move On From CMA Regime, OBL Chief Says

April 22, 2024
Updates to the UK’s open banking system are “right around the corner” and will entail a move away from the retail banking standards set out by the Competition and Markets Authority in 2016, Open Banking Limited (OBL) chief Henk Van Hulle has said.

Updates to the UK’s open banking system are “right around the corner” and will entail a move away from the retail banking standards set out by the Competition and Markets Authority (CMA) in 2016, Open Banking Limited (OBL) chief Henk Van Hulle has said.

OBL now wants to see a shift towards discussions about the open finance landscape and the industry's wants regarding open data, ultimately aiming for the best outcomes for end-users, Van Hulle said.

"The current system was established under the CMA order and relies on nine funders,” he said. “We need to transition away from this framework to a new vehicle with an expanded remit and increased funding sources.”

According to Van Hulle, this shift will enable the industry to both benefit from and contribute to the evolution of open finance. “It represents a significant change, and the forthcoming report will detail the steps required to transition into this new operating model."

“Our vision for Open Banking Limited is to serve as the glue that holds everyone together in this ecosystem,” he said. “Historically, we've played this pivotal role, facilitating connections among stakeholders such as the Strategic Working Group and supporting the work of the Joint Regulatory Oversight Committee.”

The Centre for Finance, Innovation and Technology (CFIT), which supports UK fintech start-ups, has also asked OBL for support, Van Hulle said.

“As we begin to move beyond the [CMA] order, we'll be ready to extend this role to supporting and implementing CFIT recommendations if requested,” he said. “CFIT will prioritise short-term and long-term initiatives to identify the next set of use cases we can collectively address and implement."

Open finance use cases 

Van Hulle was positive about the outlook for open finance in the UK, and said several use cases are in high demand for open finance adoption. 

“This is particularly evident in the fintech sector, where access to capital is crucial,” he said. “There are diverse avenues for obtaining capital, ranging from loans and revolving credit to working capital and venture capital investments.”

“It's essential to ensure a broad range of data sets are available, enabling business leaders to access finance more readily and breathe new life into their endeavours."

He continued that small and medium-sized enterprise (SME) finance is a top priority. “It not only fuels growth but also enables SMEs to scale up effectively. The significance of SME finance extends beyond individual businesses, impacting the entire fintech industry."

Furthermore, the cost of living is seen as “undeniably a key consideration for open finance adoption”.

"Whether it's SMEs, sole traders, or end-users like me or yourself, access to the best deals needs to be available,” he said. “Savings accounts, while not currently included in open banking, are often seen as an important addition.”

Van Hulle, who has previously worked at the UK Post Office heading up customer experience and digitisation, suggested that it would not be surprising if the ongoing Financial Conduct Authority review into cash savings includes recommendations for savings accounts to be integrated into open finance, even if not made mandatory.

A bright future for open banking?

Van Hulle said he remained “incredibly optimistic” about the progress of open banking in the UK. “The level of engagement within the industry is impressive, and there's a growing awareness among people about the potential of open banking and open finance,” he said. 

For example, Van Hulle pointed to substantial growth in application programming interface (API) calls — a metric reflecting the activity within the open banking ecosystem. 

He also welcomed engagement from larger players in the industry, saying that it is “encouraging to note the adoption of this technology by major entities like Apple”.

“Equally uplifting is the robust increase in both the volume of payments and the user base, with an impressive 9.5m consumers and SMEs already utilising open banking services,” he said, adding that the number of users engaging in open banking payments has now surpassed those using account information services.

"Tax payments have emerged as a significant use case, alongside substantial transactions such as ISA allowances and premium bonds,” he said. “This growth trajectory is truly encouraging, and I'm eagerly anticipating what the future holds."

To find out more about the UK’s plans for open banking, read Vixio’s story here

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