This morning the Joint Regulatory Oversight Committee (formed of HM Treasury, the Competition and Markets Authority, the Financial Conduct Authority and the Payment Systems Regulator) published its recommendations for the next phase of open banking in the UK.
Commenting on the update, Emma Steeley, Chief Executive of Freedom Finance, one of the UK’s leading digital lending marketplaces, said: “The mass adoption of Open Banking will improve financial outcomes for millions of financial services customers.
“The UK is already a global leader in the use of Open Banking technology and its success is tangible evidence of the benefits that the fintech sector in this country can deliver for consumers when acting in lockstep with the government, regulators and the wider financial service industry.
“It is encouraging to see the commitment in this roadmap to building up scale which is pivotal to Open Banking becoming ubiquitous in this country. To achieve this, the ecosystem needs to increase competition by offering consumers the widest possible selection of providers, products and services from the most reputable brands to deliver safety and choice.
“In the consumer credit sector, Open Banking is significant because the widespread sharing of transaction data can help lenders deliver more personalised and suitable products by using a far wider set of criteria to assess customers. This not only matches products with customers in a bespoke manner but increases access to the credit market by generating a far more accurate risk profile of a customer through an increasingly holistic assessment of their creditworthiness compared to the narrow parameters used to generate credit scores.
“For example, it means a person with a thin credit file through no fault of their own – like divorcees or expats returning to the UK – but posing no greater risk to lenders will not face exclusion from the market.
“We urge the industry to continue working with the government to push forward proportionate regulation, improve data sharing and support the development of payments capabilities. Only through fintechs, government and the retail financial services working together can we make Open Banking a truly great UK success story.”
