As part of its Market Investigation into competition in the UK’s retail banking sector, the Competition and Markets Authority (CMA) is requiring the nine largest current account providers in the UK to implement Open Banking.
Developing the Open Application Programming Interface (API) standard will enable customers to consent to allowing third parties safe and secure access to their current accounts; to either gather transaction data or initiate payments on the customer’s behalf – also known as Open Banking. This will give customers more control over their data and will support an emerging market of new, exciting third party products and services, such as tailored price comparison websites.
The requirement from the CMA coincides with the EU legislation, the revised Payment Services Directive (PSD2), which requires all payment account providers across the EU to provide third party access. While this does not require an open standard, PSD2 does provide the legal framework within which the CMA requirements will have to operate, and the CMA mandate will need to be delivered in a way that is PSD2-compliant. It will keep customers safe and secure, enhancing the opportunities for enhancing customer propositions.
Payments UK chairs and supports the PSD2 Stakeholder Group; part of the Open Banking Implementation Entity’s governance structure to facilitate the development of solutions to align the requirements of Open Banking and PSD2.
Below we explain the overlaps and differences in scope of the two regulatory requirements (and some of the many acronyms in use).