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OPEN by Eliga July insights

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In July, Eliga Services attended FinTech Week London, where the Trustee of the OBIE, Imran Gulamhuseinwala spoke of open banking, its adoption and its future. 

 

Imran Gulamhuseinwala OBE noted that while open banking has become a life’s passion for many, it is still one of Financial Services' ‘best-kept secrets.’

We often see news about challenger banks and cryptocurrencies, but open banking doesn’t appear in the same headline-grabbing articles. Nonetheless, adoption is growing steadily as countries begin to see the importance of open banking in empowering customers and many other aspects, including users’ data rights (our right to access our data and share it as we wish).

He concluded his speech, reminding the audience that as the mandate for OBIE is coming to an end, it’s important that the good work of the OBIE isn’t undone as open banking is transitioned out of the regulatory sphere into the industry as a platform for products and services. 

Here's a recap of the work the OBIE has done in the UK: 

 

Implementation

  • According to the Trustee, 90% of the majority of the functionality has or will be delivered shortly.

  • OBIE was tasked with implementing sweeping, automatic transfer of funds in customers’ accounts.

  • Variable recurring payments (VRPs) will be a game-changer for payments. If approved, Gulamhuseinwala said, it will be in production by the end of the year.

 

Participation

  • The open banking ecosystem in the UK has grown strongly from 204 to 319 as of June this year.

  • There are now 114 regulated entities with at least one live proposition.

  • The breadth of innovation helped debt charities and vulnerable customers improve their health and well-being.

 

Adoption

  • According to the Trustee of the OBIE, 4 million UK people and small businesses are using open banking enabled businesses.

  • There was strong uptake with small businesses during the pandemic. 

  • HMRC adoption now allows users to pay their taxes with open banking.

 

What’s happening in the US?

In July, President Joe Biden urged the Consumer Financial Protection Bureau (CFPB) to move forward on rules giving banking customers the right to move their data from one bank to another. According to Business Insider, although the Dodd-Frank Act became law in 2010, the CFPB ‘has been slow to implement open banking regulation under it’, only laying the groundwork in 2016 and 2017.

  • Insider Intelligence reports 25% of US bank executives to plan to implement APIs this year.

  • Plaid remains a leader in the open banking space in the US with a network of over 11,000+ banks and financial institutions across the globe.

  • In January, Plaid called off a $5.3 billion deal with Visa, ‘following a U.S. government lawsuit aimed at stopping the proposed transaction on antitrust grounds.’ Less than six months later, Visa acquired Tink.

 

What’s happening in Canada?

Nearly three years have passed since Canada launched its consultation process for open banking. However, Canada hasn’t made much progress in ‘creating a better and more hospitable regulatory environment for consumer-led data sharing.’ An opinion piece published in The Globe and Mail noted, ‘Even if the Finance Ministry’s Advisory Committee report were released tomorrow, the glacial pace of progress on this file will not change meaningfully in the short term.’

Nonetheless, there are some signs that the ecosystem is evolving:

  • In July, FICANEX Technology and FinConecta announced a partnership to deliver the first in market Open Banking platform in Canada.

  • Furthermore, a large group of prominent US and Canadian financial institutions banded together to form the Financial Data Exchange (FDX), which is seeking the adoption of an industry-wide API technical standard. 

 

Payit by NatWest

We're sending our congratulations to NatWest and its teams! Open Banking Expo announced Payit by NatWest as the Winner of the Best Third-Party Providers (TPPs) category.

Watch Lucy Smith, Product Owner discuss the bank's payment innovation

 

Join the conversation

Follow Eliga on LinkedIn  We'd love to hear what you think about July's insights and how variable reoccurring payments (VRPs) will change payments in the UK.