The story so far...

“The UK has a great story to tell on open banking. With more than six million active users, open banking has unlocked new business models and services, and improved financial outcomes for individuals and businesses.

In the current cost of living crisis, open banking has an important role to play in helping consumers effectively and intelligently manage their money. There is an opportunity for open banking to drive an even greater reduction in costs for businesses and households. To achieve this, government and regulatory action would be welcomed around areas such as extending the scope of VRPs or 'sweeping', which will, for example, help reduce transaction costs and enable additional budgeting tools.

A mix of both collaboration and competition in 2023 between fintechs and the heritage financial institutions will be necessary to drive the best outcomes for consumers.

We also predict even more digital financial services companies will use open banking, as people continue to demand the speed, efficiency, and ease that it provides. Open banking will continue to transform the payments and lending landscapes and will also have a key role to play in reducing fraud in financial services.

To achieve its full potential in 2023 and beyond, it is imperative that we all – government, regulators, and industry – work together to keep up the positive momentum and move forward with the development and acceleration of open banking in the UK, for the benefit of the consumer.”

“Businesses and consumers are looking for ways to make their money go further now more than ever before. As a result, the sweeping (me-to-me payments) use cases we can expect to see in the spotlight this year will be based on intelligent savings; having the flexibility to avoid overdrafts, capitalise on interest rates, and choose how much to save each month based on your current situation cannot be overstated.

But for me, the really exciting use cases lie in non-sweeping (me-to-business payments). In 2023, we can expect to see VRPs emerge as a viable alternative to Direct Debit and card-on-file transactions, eventually transforming the world of ecommerce at checkout.

But for non-sweeping to truly become a game-changer, we need more banks to participate and the implementation of an industry-wide framework that works for every participant. Open banking is built on the premise of making data and payments more accessible for everyone. To drive adoption further, players across the ecosystem must come together to make VRPs a reality for the many, not the few.”

“As open banking enabled account-to-account services are adopted, there’s opportunity for them to compete with other payment solutions. We welcome this development because competition on quality and cost will allow consumers and businesses to choose the payment method that meets their needs most.

While open banking is already a strong option in some cases, it’s yet to reach its full potential. Adoption for more complex transactions, such as retail purchases, remains low and the system’s rules and standards need to evolve. This means updating standards to meet functional requirements, ensuring dispute processes are in place, having reliable end-to-end availability, and putting in place a sustainable pricing model that allows firms to continue to invest.

As co-chairs of the Joint Regulatory Oversight Committee, we’ve sought the ecosystem’s input on these topics through the Strategic Working Group. As well as providing us with valuable insight, it’s demonstrated that there’s great enthusiasm for further developing open banking.

But opinions on how and when vary. It’s in areas where interests are not aligned that the PSR may need to intervene to break deadlocks and ultimately ensure that the ecosystem continues to make significant progress in 2023.”