Future Of UK Open Banking Secure Despite Bill Setback, Says Open Banking Limited CEO

June 10, 2024
Open Banking Limited's CEO has stated in an exclusive interview with žž that uncertainty over the UK Data Protection and Digital Information (DPDI) bill will not affect the future of open banking.

Open Banking Limited's (OBL) CEO has stated in an exclusive interview with žž that uncertainty over the UK Data Protection and Digital Information (DPDI) bill will not affect the future of open banking.

One major disappointment for payments insiders following the UK's snap general election is that the DPDI bill failed to pass and receive royal assent before parliament was shut down.

As a result, the bill that would have laid the foundation for the next steps in open banking and open finance in the UK has returned to square one.

Although sources question whether the next government will prioritise it, OBL’s CEO Henk Van Hulle remains positive about the future of open banking.

"We will maintain momentum in the UK despite the general election,” said Van Hulle. 

The CEO said that the UK is in a good position to continue to advance the open banking agenda, explaining that in the now fallen DPDI, the primary focus of the OBL was smart data powers that enabled the Long Term Regulatory Framework (LTRF). 

“As we start a new parliament, there is an opportunity for the government to streamline the bill, focusing only on smart data powers, which have cross-party support, which will make it easier to accelerate through the legislative process,” he said. 

The DPDI bill, although loved by fintech players, became controversial due to unrelated provisions that would have required banks to monitor benefit claimants' accounts.

It also raised concerns in the EU, where a parliamentarian wrote to the European Commission questioning the UK's compliance with the General Data Protection Regulation if the bill passes. 

However, Van Hulle pointed out that the DPDI bill was almost through parliament and “would have likely achieved royal assent before the summer recess” had the election not been called. 

“With all the main parties heavily supportive of open banking, open finance and smart data we continue to support the work of policymakers,” said Van Hulle. “I am confident that we will be ready to restart the legislative process as soon as the new government and parliament is formed from July 5."

Van Hulle added that the OBL expects the UK's Joint Regulatory Oversight Committee, chaired by the Financial Conduct Authority and Payment Systems Regulator, to publish the report on the future of open banking after the summer.

“Once smart data powers are in place, HM Treasury will put in place the LTRF and a future entity, that will be accountable to the FCA, to carry out activity to unlock the full potential of open banking in the UK,” he said. “To aid the transition from open banking to open finance, we need to level up and mandate participation in open banking across all banks in a centralised regulatory framework.”

According to Van Hulle, this all requires the smart data powers that were contained in the DPDI bill to become law “sooner rather than later”. 

“We need to eventually move beyond the CMA Order to the LTRF so the standards can continue to evolve and new use cases and propositions can be developed and supported,” he urged. 

Around the world 

Van Hulle eagerly discussed his ambitions for the UK's OBL to become a global standards setter, emphasising the benefits of aligning open banking standards worldwide.

"We set the first standard six and a half years ago, and 60 jurisdictions have examined our blueprint, including jurisdictions like Thailand, Brazil, Canada and Colombia,” he said. 

Van Hulle pointed out that many jurisdictions now use the same standards as the UK, with 48 adopting a centralised approach.

According to the CEO, this central approach is very beneficial. “Imagine the benefits of interoperability across 48 countries with similar standards, which in turn can facilitate further global standardisation more easily."

"We are applying these standards in terms of payments and protections,” he said. “My view is that we should continue engaging in global conversations to interconnect ecosystems for data sharing.”

For example, Van Hulle stressed the need to explore ways to prevent fraud in real time. “This also involves examining global players and leveraging their capabilities."

Regarding the UK's neighbours in the EU, Van Hulle acknowledged “it will always be difficult to align 27 member states".

“We see fragmentation and a lack of centralised implementation impacting the growth and success of open banking in the EU,” he said.

Van Hulle highlighted that the absence of a single standard and an implementation entity with monitoring powers has led to slower user adoption growth in the EU compared with the UK's approach.

“A more centralised approach, along with some regulatory support and nudging, could be helpful but this is for EU policymakers to decide as they develop the third Payment Services Directive and the Financial Data Access Framework,” he said. 

“Sometimes, you need a push and a mandated approach to achieve critical mass."



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