The UK government has recommended the creation of an open banking standard which helps share and use financial data, arguing that the move would improve choice for customers, promote competition and stimulate innovation.
Having promised to work with banks and fintech firms on a detailed framework for an open API standard, the government set up the Open Banking Working Group (OBWG) in November, 2015, giving it a remit to explore how data could be used to help people to transact, save, borrow, lend and invest their money.
Reporting back, the OBWG says that bank data, including information about products and services, should be made available as open data so that services such as comparison tools, can be built allowing customers to get more out of their financial relationships.
In addition, an open API should be created to enable services to be built using bank and customer data. This includes open data about products and services but also shared data about bank transactions that individuals or businesses can choose to share themselves through secure and controlled means.
By making it easier to compare products and services, the working group says the move will help people tailor a suit to their individual needs and make significant savings. Just switching overdraft facilities could save people an average of GBP 140 a year, according to CMA research.
OBWG co-chair and Barclays executive Matt Hammerstein, says: "Banking as a service has long sat at the heart of our economy. In our digitally enabled world, the need to seamlessly and efficiently connect different economic agents who are buying and selling goods and services, is critical. The Open Banking Standard is a framework for making banking data work better: for customers; for businesses and for the economy as a whole."
Responsibility for the project now rests with the Open Banking Implementation Entity. The report calls for a "minimum viable product" for an open banking API to be launched towards the end of the year, with personal customer transaction data included on a read-only basis at the beginning of 2018, and the full scope, including business, customer and transactional data, reached by 2019.
Commenting on the report for the government, Economic Secretary Harriett Baldwin welcomed the framework, praising not only its ability to benefit customers and businesses but also its potential to "provide fintechs with a globally unrivalled opportunity for innovation in the UK".
Speaking for the industry, BBA chief executive Anthony Browne also backed the plan, saying: "The UK has the potential to be a world leader in the way we use data to help drive competition and innovation in the banking sector, which will give customers more choice and help them save money."