Open banking roadmap ushers in new era for fintech innovation

The UK has forged ahead on a major crossroads for open banking as the Competition and Markets Authority (CMA) announces it has completed its roadmap of the implementation of the financial technology.

All nine banking providers mandated by the CMA under the Retail Banking Market Investigation Order (the CMA Order) have successfully competed the Roadmap and associated required functionality to offer the full suite of open banking payment and account information services.

“Today’s update is an important milestone,” Dan Turnbull, senior director at the CMA said.

“The completion of the Roadmap cements the move to the future of Open Banking, one that can expand the benefits of Open Banking beyond the scope of the CMA’s Order. OBL’s [Open Banking Limited] work is vital to the ongoing success of Open Banking.

“We look forward to continuing to work closely with the FCA, PSR and HM Treasury to help deliver the future arrangements for Open Banking.

As we move towards this future, we will continue to ensure the Standard is maintained and that the nine banking providers are held to their ongoing obligations under the CMA’s Order.”

Since the announcement of a substantial completion of the Roadmap, the final banking providers, Danske Bank, Bank of Irelands, and Allied Irish Bank, have fully delivered all their Roadmap requirements, including variable recurring payments (VRPs) for sweeping.

Essentially, VRPs for sweeping automatically allows users to transfer money from different accounts even if they are with different providers, as long as both accounts are in their same name.

While the agreement has come later than initially intended, it provides the UK with assurity of its position as a major player in open banking, bringing enhanced financial control and flexibility to UK customers.

Open banking has transformed the payments and data landscape in the UK, enabling customers and small businesses to leverage their current account information securely with TPPs, who use that data to tailor their products and services to peoples’ specific financial circumstances. It also offers a new, secure way to pay for goods and services.

2024 has been a year of rapid adoption and strong growth for open banking, with 11.32 million users in July, a 12 percent uplift from the previous month. In terms of payments, 19.54 million payments were made in July, and of these, VRPs for sweeping accounted for 2.45 million – a growth of 23.9 percent. With an expanding user base the opening banking ecosystem is valued at over £4 billion.

The completion of the Roadmap prepares the UK for the next phase of financial innovation as we move beyond the CMA Order. It is also timely, as the Government prepares to introduce the Digital Information and Smart Data Bill. This is expected to build on the achievements of open banking and deliver the benefits of data sharing to smart data schemes in key economic sectors, including energy, telecoms, transport and retail.

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“The CMA’s confirmation of the Roadmap’s full completion is a major achievement for open banking in the UK,” Marion King, trustee and chair of Open Banking Limited, the organisation that works with the CMA to develop its open banking regulations, commented.

“I’d like to pay tribute to the banking providers who have successfully implemented the Roadmap, and the ecosystem and wider stakeholders for their hard work and collaboration that allowed us to reach this major milestone in a relatively short period of time.

“Thanks to their efforts, we are now able to move closer to a smart data economy in which we unlock the full potential of open banking for consumers and businesses alike.”

Henk Van Hulle, CEO of OBL, added: “The rollout of sweeping functionality across all the CMA9 is a crucial step in extending the benefits of open banking to a broader range of customers.

“As we look ahead, the next exciting chapter will involve exploring the potential of commercial VRPs, which have the capacity to revolutionise the way businesses manage payments.

“We are eager to see how third-party providers will harness this new capability to drive further innovation in the financial sector.”

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