Blog article
See all stories »

What must happen to get Open Banking done right in the UK and Europe?

While Open Banking has been a game-changer for the UK’s financial services sector, the rest of Europe has yet to fully embrace this concept in the same way. This has resulted in a lack of consistency in implementation and a range of challenges that need to be addressed.

Innovate Finance, the industry body representing UK FinTech, in partnership with Boston Consulting Group, recently released a new report that outlines those challenges and goes on to suggest recommendations for the UK to continue leading in Open Banking. While the UK is currently considered one of the most advanced Open Banking markets in the world, its position is being challenged as other countries advance.

One of the major challenges that needs to be addressed is the accessing of banking data. There are ongoing issues with this, which include outages, bad availability, and API request quotas. These issues are preventing FinTech companies from fully leveraging the potential of Open Banking and being able to unlock innovative new services that benefit consumers.

To address these, there needs to be greater transparency and fewer obstacles in the Open Finance sector. This includes creating a clear framework that incentivises progress and wider adoption of variable recurring payment technology. There also needs to be more inclusive governance, which makes sure that there are fair and equitable agreements to ensure everyone is benefiting from and working towards the next era of the UK’s Open Finance ecosystem. 

Beyond the UK – in terms of enabling real-time cross-border payments throughout Europe, it has now been five years since the Revised Payment Services Directive (or PSD2). There are currently about 500 regulated open banking providers and millions of Europeans who have benefited from such services. 

Too many banks are yet to recognise the value of real-time payments for their customers, and this is partly why Europe falls behind in failing to make instant payments the default payments infrastructure. However, the EU is moving towards legislation that makes it mandatory. 

What I am hoping for, as many other fintech leaders are, is a fresh and forward-looking perspective on policy. A new set of guiding principles to focus Open Finance on real-world outcomes. I truly believe in Open Finance is a force for good in the UK and beyond, helping consumers and businesses navigate financial challenges. However, to get to the next level, a governance structure with clear priorities and incentives for all stakeholders is needed.

As for the UK, it needs to continue leading the way by creating a supportive regulatory environment, developing more use cases that show the benefits to consumers, and addressing the ongoing issues with accessing banking data. If these challenges can be overcome, Open Banking has the potential to continue driving innovation and perpetuating all the benefits that brings.

 

 

5060

Comments: (0)

Brad Goodall

Brad Goodall

CEO

BANKED

Member since

18 Nov 2021

Location

London

Blog posts

11

This post is from a series of posts in the group:

Open Banking

Open Banking regulation, innovation and technology and it's potential to revolutionise the Financial Services Industry.


See all

Now hiring