The UK fintech industry has welcomed the Open Banking regulator’s recommendations for the next phase of open banking. The Joint Regulatory Oversight Committee (JROC) has said that its recommendations will ensure that open banking develops in a “secure, scalable and financially sustainable manner”.
For this, the JROC – which has replaced the Open Banking Implementation Entity (OBIE) – has laid down five key steps. It hopes to increase availability and performance levels, reduce the risks of financial crime, and ensure effective consumer protection when something does go wrong. It also recommended improving information flow to third-party providers and end users, and promoting additional services with variable recurring payments (VRPs) to be used as a pilot. VRP allows people to vary not only the amount of payments they already do direct debit, but also how much they are pushed out for any given payment and the total amount paid over a given period. Enables capping the amount.
In a joint statement, the Financial Conduct Authority and the Payment Systems Regulator, who jointly oversee JROC, said: “Open banking can be a UK success story and we want to help it grow and develop sustainably.” Today’s report sets out a roadmap and framework to deliver the next phase of open banking.
“Only through effective collaboration can we fulfill our ambition and develop open banking in a way that fosters continued innovation and competition, to the benefit of consumers, businesses and the wider economy.”
According to a recent report by independent advocacy group the Coalition for the Digital Economy (Codec), more than 4,800 people work in open banking in the UK and the industry raised more than £886 million last year.
In 2018, UK banks were required to implement the Competition and Markets Authority’s (CMA) open banking rules, which led to the development of application programming interfaces (APIs) in banking to give consumers more control over their accounts.
The ultimate goal was to increase competition in an area dominated by large financial services companies. Customer banking data is shared by the industry via APIs, with customer permission, enabling businesses to offer tailored products.
More than seven million people in the UK used open banking last year, marking five years since the competition regulator forced banks to launch the services. According to data disclosed to Open Banking Limited Building Societies, two million users were added in the last year.
Cities minister Andrew Griffiths said: “The UK leads the pack in open banking with 7 million users, but we can’t back down and put our feet up. Today’s plan will make banking more accessible to millions of people.” Will provide a new generation of products and services while making them accessible and convenient.
Janine Hurt, CEO of fintech trade body Innovate Finance, said: “We focus on next steps by all banks on improving performance and implementation, further action to tackle fraud, and supporting open banking payment services and other non-sweeping Welcome to give. Variable Recurring Payment Products. These are the key projects that our members have identified as priorities. We need to see momentum and momentum now.
“We welcome the government’s commitment not only to reform open banking but also to expand open finance to other financial services and develop a roadmap for wider use of open data. Together Taken together – open banking, open finance and open data – these provide the foundation for future innovation and consumer benefits.
Hiroaki Takeuchi, co-founder and CEO of GoCardless, said the report marks an important milestone in the UK’s open banking journey. “We welcome JROC’s priority for the roll-out of VRPs so that more UK businesses and consumers can benefit from them. I’m also pleased to see the focus on technical, but important issues that need to be resolved take a back seat.
“Above all, the report highlights the need for government, regulatory authorities and industry participants to work together to achieve JROC’s vision. There is not a moment to lose and we are excited to play our part,” Takeuchi said.
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