The United Kingdom uses the UK Open Banking Standard. In 2016, the Competition and Markets Authority (CMA) in the UK published a report on the UK’s retail banking market. The report found that older, larger banks aren’t incentivised to compete to gain customers’ business, while newer banks find it difficult to access the market and grow. One of the CMA’s recommendations to tackle this problem was Open Banking. In August 2016, the CMA issued a ruling that required the nine biggest UK banks – HSBC, Barclays, RBS, Santander, Bank of Ireland, Allied Irish Bank, Danske Bank, Lloyds and Nationwide – to allow licensed startups direct access to their data down to the level of transaction-account transactions (now all institutions that offer payment accounts must participate).
In April 2023 the JROC released their much-anticipated report, outlining the regulatory landscape for the next two years. It highlights the ambition for Open Banking payments to rival card payments. The report also promises concrete steps, including establishing a framework for fraud data collection, a crucial step for wider Open Banking payment adoption. Additionally, it expects the future entity to facilitate multilateral agreements for variable recurring payments (VRPs), addressing a longstanding challenge in creating a sustainable commercial model for the industry.
The report envisions a commercially sustainable environment for all stakeholders, with a focus on premium APIs like VRPs and data APIs. While it mentions improvements in API performance and error message reporting, specifics are lacking. The report also addresses the design of the future entity, with broader representation and funding from all authorised payment service providers (ASPSPs). It explores various funding options, excluding the use of the FCA levy or similar mechanisms, emphasising the need for a more adaptable approach.
Looking to the long-term regulatory future, the report expresses optimism about Open Banking’s prospects in the UK. It outlines 29 actions to ensure scalability and readiness for Open Finance. Furthermore, the report discusses the Data Protection and Digital Information bill, which delegates powers to create smart data schemes, including Open Finance, under the relevant ministers of state. However, it notes that the bill is in the early stages and subject to potential changes during the committee stage.
In January 2023, the CMA announced that the standards had been fully implemented by the six largest banks in the UK.
In their European Open Banking league, Yapily ranked the United Kingdom 1st out of 18 countries. The UK comes out on top as the leading adopter of Open Banking, with its clear functionality and more widespread mandating of other features, such as Bulk Payments and VRP (variable recurring payments). Yapily states that Open Banking has been implemented successfully in the UK and continues that the focus should now be on fixing some of the remaining issues in the technical implementation, such as the user experience and API quality.
The UK also tops Yapily’s Open Banking League table due to high digital readiness among the public, a pro-innovation regulatory environment, and the most TPPs (Third-Party-Providers) across Europe.
Yapily states that the industry would benefit from a roadmap to further the implementation of Open Finance and focus on building an Open Finance framework for the future. The Financial Conduct Authority (FCA) is currently drafting principles of Open Finance, which set out that regulation would probably be needed to ensure that consumers are protected, data is used ethically, and that liability was clear if things went wrong.
On the 19th of December 2022, OBIE published its plans for a transition into a new entity, overseen by a new Joint Regulatory Oversight Committee. The committee stated a priority to increase competition and innovation through a greater choice of payment methods, building a scalable model for future data sharing and establishing a sustainable footing for the ongoing Open Banking ecosystem.
In response, a group of Fintechs, including Monzo, Wise and MoneyHub published, an open letter asking for clarity about future governance and enforcement.