In August 2016, the Competition and Markets Authority (CMA) published the final report for its retail banking Market Investigation. The CMA has set out a package of remedies aimed at increasing innovation and improving competition.
This included a requirement for the nine largest current account providers to make available to authorised third parties:
- Standardised product and reference data (by 31 March 2017);
- With customer consent, secure access to specific current accounts in order to read the transaction data and initiate payments (by January 2018).
This information will be shared through an open Application Programming Interface (API) framework which will prioritise customer protection. The Open Banking Implementation Entity will develop API Standards allowing two different pieces of software from different financial institutions to interact and exchange data.
To read more about APIs, read Payments UK’s report.
What is Open Banking?
The introduction of ‘open banking’ in the UK will transform banking as we know it. Customers will have the option to share information about how they operate their bank account with organisations that will work to deliver an enhanced banking experience, for example by offering comparison and switching services to help customers identify the best financial products for them.
Payments UK has played an important role in helping the initiative get off the ground and in its ongoing development. To date this has included supporting the industry’s development of the Open Banking Standard report as well as acting as Secretariat to the Open Banking Implementation Entity Steering Group.
Payments UK is currently working on understanding how the requirements of the second Payment Service Directive (PSD2) impact Open Banking. Payments UK is also the official representative of PSD2 stakeholders on the Open Banking Implementation Entity Steering Group.
To learn more about the Open Banking organisation, please visit their website.
Payments UK’s work and the PSD2 Stakeholder Group
As part of its organisational structure, Open Banking draws on advice from a number of stakeholder groups including a PSD2 Stakeholder Group, chaired and supported by Payments UK. The group allows PSD2 experts, from both the UK and across Europe, to develop solutions with a view to aligning the requirements of open banking and PSD2.
The PSD2 Stakeholder Group is an interest group open to both members and non-members of Payments UK.