UK’s biggest lenders plot ‘open banking’ not-for-profit
Written by Hit Music Radio News on 01/03/2021
Britain’s biggest lenders will this week unveil proposals for a not-for-profit company to oversee the industry’s attempt to bolster competition through a system known as ‘open banking’.
Sky News has learnt that UK Finance, the sector’s principal trade association, will publish a report on Tuesday setting out its plans to comply with a series of requirements imposed by the Competition and Markets Authority (CMA) five years ago.
City sources said the report would be an important step towards entrenching open banking as a permanent feature of the industry landscape.
Known as the CMA9, banks including Barclays, HSBC and NatWest Group were the subject of a CMA order in 2016 following an investigation into the personal current account and SME banking markets.
The watchdog concluded that the UK’s biggest banks were not competing hard enough for customers’ business and that Open Banking “should deliver a new, secure option for customers”.
In the wake of that order, the nine lenders agreed to pay for the Open Banking Implementation Entity, which oversaw the initial phases of the system’s adoption in the UK.
Open banking is designed to make it easier for customers to securely compare the deal they get from their bank with rival services by aggregating third-party data on a single platform.
One industry source said the new service company, which will have a slate of independent directors, would pave the way for the open banking model to be extended to other products, including consumer credit, insurance, mortgages, pensions and savings.
Doing so would involve an expansion of the industry’s adoption of open finance and smart data frameworks, they added.
It is unclear what the new not-for-profit company’s annual budget would be or how it would be split between the nine participating lenders.
The other members of the CM9 include Lloyds Banking Group and Nationwide, Britain’s biggest building society.
The proposals from UK Finance will be published just days after a report by the businessman Ron Kalifa proposed a ‘Digital Big Bang’ for the British fintech sector, aided by tech visas, a new £1bn fund and reforms to the London stock market’s listing rules.
A UK Finance spokeswoman declined to comment on Monday.
© Sky News 2020