オープン・バンキング革命の熱気の高まりをいかにして引き出すか

“A week is a long time in politics” said former British prime minister Harold Wilson (reportedly) in 1964, referring to how quickly the fortunes of a politician could change. Another memorable phrase attributed to him was a reference to the ‘white heat of the technological revolution’ and the need for his country to capitalise on scientific and industrial progress to prosper. While his era has long since passed, these two phrases are an excellent summary of recent activity relating to open banking in the UK.

With the original roadmap for UK open banking now complete, much has rested on the outcome of the report from the Joint Regulatory Oversight Committee (JROC) on what will come next. Along with the future roadmap, the shape, and responsibilities of the new oversight body (needed now that the work of the Open Banking Implementation Entity (OBIE) is complete) have also been outlined.

This report was published in April and has been warmly received by the industry. Not just because it charts a clear path for scaling open banking, or because the process invited input from stakeholders across the value chain. What is notable about the UK’s plan for open banking is that it recognises the need for a sustainable economic model that incentivises the necessary participation and investment from banks in the growth of the ecosystem.

Those interested in the details of the JROC report can find it here but, in summary, there are five main strands:

1. Designing of the future regulatory entity. This will emerge from cross-stakeholder consultations through to Q3 2023 but is likely to result in the future entity being a central body with responsibility for shaping and enforcing standards, as well as being involved in facilitating the creation of multilateral commercial agreements where necessary.
2. Increasing coverage and ‘levelling up’ the ecosystem. One headline here is that the coverage of the open banking framework will be extended beyond the current CMA 9 institutions to cover the rest of the market. In addition, there will be a renewed focus on API availability and performance, as this has been highlighted as an issue by some TPPs. Additional data collection and reporting will be a central pillar of this activity.
3. Improving the existing Open Banking framework. There are several areas that the cross-industry strategic working groups identified for improvement. Mitigating the risks of financial crime in open banking payments is high on the agenda, and increased data sharing across the ecosystem will be a clear step forward. As part of this, fraud statistics will be collected and shared, while the use of transaction risk indicators (TRIs) by TPPs initiating payments is expected to help banks move towards higher and more standardised payment limits.
4. Addressing end-user concerns. Ensuring that end users can have confidence as they engage with open banking is a high priority item. More consistent and consumer-friendly error messaging and payment status information is on the agenda to address the challenges in these areas. A more complex topic is dispute resolution. A gap analysis of the current process is targeted for delivery in Q4 2023, which will be followed by a consultation into potential remedies.
5. Using VRP as the pilot for further premium services. A discussion paper due in Q2 2023 will outline the high-level principles for a commercial model for premium APIs (those which go beyond what is mandated under the original CMA order). This will be applied first to the creation of a framework to scale Variable Recurring Payments (VRPs) for non-sweeping use cases. This has been identified as a priority area, and work will begin on this immediately. This is likely to see the creation of a de facto ‘scheme’ rulebook for VRP, covering a multilateral commercial framework, dispute handling and liability arrangements.

The ambition behind the JROC report is clear, as are the immediate roadmap items. The devil will be in the detail though, and one currently unanswered question is how these activities will be paid for while the funding model for the future entity is finalised. Gaps in the ability of the OBIE to meet these obligations will risk seeing progress stall.

This is not lost on the OBIE. In her remarks at the Fintech North Open Banking Summit in May its Chair and Trustee, Marion King, was careful to note this point. She commented that open banking requires standardisation and frameworks to thrive. This in turn requires an oversight body (one that is adequately funded) to shape, monitor, and enforce these frameworks. At the end, this rests on the powers to do so, which can only come from primary legislation.

On this point, King was keen to stress that her early interactions with government ministers on the issues were extremely positive, quoting one Treasury representative as saying: “we will do whatever is needed for the UK”.

To conclude with another popular saying, “the proof of the pudding will be in the eating”. Intent, timelines, and roadmaps are important, but it is the progress against the target milestones that will determine whether the UK’s open banking model will once again chart a course for others to follow.