OPEN by Eliga July insights

In July, OPEN by Eliga 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).

In conclusion, he reminded the audience that as the mandate for OBIE ends, it’s important that the good work of the OBIE isn’t undone.

 

What has the OBIE done in the UK?

 

Open banking implementation

  • According to the Trustee, 90% of the functionality is available
  • OBIE was tasked with implementing the 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.

 

OBIE Participation

  • The open banking ecosystem in the UK has grown strongly from 204 to 319 as of June this year.
  • 114 regulated entities operating with at least one live proposition.
  • The breadth of innovation helped debt charities and vulnerable customers improve their health and well-being.

 

UK 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, 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.
  • It has 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).
  • The FDX 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 OPEN by 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.