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UK’s Open Banking Standard here by end of 2016

In its report, Introducing the Open Banking Standard, the Open Banking Working Group (OBWG) has recommended the creation of an Open Banking Standard that will make it possible for banking data to be shared and used securely.

The OBWG is a group of industry experts from banking, data, business and consumer communities. It was set up in September 2015 at the request of the UK government to explore how data could be used to help people transact, save, borrow, lend and invest their money.

The standard would act as a guide for how bank data should be created, shared and used. The standard should be developed collaboratively and transparently. It will use application programming interface (API) technology, which enables access to open data as well as secure shared access to private data.

Sharing data with third parties

Access to open, shared or closed data would enable innovation within the banking space. For example, applications could be created to enable customers to choose financial products more easily or so that businesses can share financial data with third parties (such as accountants).

The broad aim of the Open Banking Standard initiative is to improve competition and efficiency in the UK economy and also to stimulate innovation in the banking sector. According to the OBWG, the implementation of the framework could significantly accelerate the implementation of new EU regulations on banking data. It would also place the UK in a strong position to lead the development of a similar international standard.

Open Banking Working Group recommendations

The OBWG's report recommends that:

  • bank data, including information about banks’ products and services, should be made available as open data, so that services can be built allowing customers to get more out of their financial relationships (for example, through product comparison services);
  • open APIs should be created to enable services to be built using bank and customer data. These would include open data about products and services as well as shared data about bank transactions that individuals or businesses can choose to share themselves through secure and controlled means.

Introducing the Open Banking Standard

For businesses, an Open Banking Standard based on API technology could be an easier way to access data usually owned and stored only by financial institutions, such as account and payment transaction data. Sharing such data, for example for the purpose of bookkeeping, with a trusted third party such as an accountant, could become much easier. An API from the bank could enable customers to share data just be logging into their accounting system and giving permission for the sharing of certain data with a chosen approved third party.

Exploit opportunities of digital economy

According to Maurice Cleaves, Payments UK’s chief executive, open API standards and open data will help the UK to exploit the opportunities of an increasingly digital economy. In a statement he said: “While an open banking standard could offer far-reaching benefits, from a purely payments perspective it will support the delivery of new ways of paying for customers.”

Open Banking API by end of 2016

The first steps towards an Open Banking API based on open data could be launched towards the end of 2016. This would be followed by personal customer transaction data included on a read-only basis starting at the beginning of 2017. The Open Banking Standard’s full scope, including business, customer and transactional data, should be reached by 2019.

CTMFile take: This report seems to have been welcomed across the board and it's certainly a positive step towards more transparency in the UK payments and banking sector. As the standard is developed over the coming months, it will be important for full transparency to be maintained so that bank clients have full confidence they are in control of their data and there is no undue influence on the strategy from the dominant UK financial institutions.

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