The techUK Open Banking White Paper examines the need for the UK to follow-up the impetus of Open Banking with a wider-ranging strategy to encompass the full range of financial services into a collaborative digital ecosystem.
Technology is the driving force behind all progression and innovation in financial services businesses. 'FinTech' and financial services are not separate sectors - the two are inter-dependent. The possibilities of tech require and allow changes in business models and regulation - so the policy direction of financial services must be led jointly by technology companies and incumbent banking/FS players.
The UK's Open Banking work will set open standards for APIs, thus allowing access to non-bank providers to customer data (with consent) and widening competition in the payments market. With cross-sector backing, and strong governmental support, this can be the first step in truly innovative, joined-up financial services for UK consumers and SMEs.
In From Open Banking to Open Financial Services - The Long View, techUK sets out six key recommendations for achieving this aim:
- A long-term vision: The UK Government must come together with regulators and industry to formulate a long-term strategy for creating an innovative, diverse financial services sector based on open data. The current disparate initiatives should be brought together into a coherent strategy.
- Digital ID: The key to a long-term connected sector is access for the customer through a single digital ID. This is required to minimise the burden of know-your-customer (KYC) and anti- money laundering rules (AML) on individual companies and to remove barriers to entry for new players.
- Open and inclusive governance: Collaboration relies on trust which is engendered through working together. The long-term governance of Open Banking and future work on open financial services must be governed through principles of transparency and inclusion.
- Collaboration to enhance competition: Traditional ideas of competition must be tempered to facilitate competition through collaboration. All industry sectors must work together to create a connected ecosystem in which all players can thrive – and end consumers and small businesses benefit.
- Common open standards: All collaboration needs a common language to communicate. The interoperability of IT systems depends on common standards – nationally and internationally. We emphasise the need for the UK to work towards common standards.
- Customer communication: Open Banking will only succeed if it is used by the customer. There is an urgent need for these new services to be communicated and explained to the public. Thought should be given to the mechanisms required to provide reassurance for consumers and small businesses.