Businesses and individuals in the UK must have greater access to data about the financial products that banks and other lenders provide, says the Open Banking Working Group (OBWG).
In an 8 February report, the Group urged the government to create a new body tasked with providing more detailed information about the fee structures and benefits that underpin loans and other deals.
With an Open Banking Standard in place, it argued, customers would be more empowered to shop around and, as a result, competition in the sector would automatically increase.
A cornerstone of the recommendations is that the new agency would manage an application programming interface (API) that would interlink lenders, and even have the ability to connect with clients’ and customers’ accounts.
According to advocacy group the Open Data Institute (ODI) – whose CEO Gavin Starks co-chairs the OBWG – if consumers could give an approved price-comparison service “explicit and limited permission” to access their accounts through an open API, they would be able to simply and quickly find the best options to fit their needs.
“Businesses could also benefit,” the ODI added. “Many SMEs use commercial software for bookkeeping, but generally have to add their transaction data manually (or pay a third party to get this information on their behalf).
“An API from their banking service provider would make it considerably easier to reconcile payments, and so provide far more up-to-date financial positions. All a business owner would need to do is log into their accounting system, select relevant bank accounts and give their permission for their data to be shared with their accounting provider, as an approved supplier.”
Starks himself said: “I have been impressed by both the speed and depth with which the Group has created a detailed framework, and continued leadership in this area will set UK banking apart.
“It will also set precedents across many sectors – a strong data infrastructure will be as important to the UK’s economy today as roads have been to our success in the industrial economy for over a century.”
Fellow OBWG co-chair Matt Hammerstein – client and customer experience head at Barclays – added: “Banking as a service has long sat at the heart of our economy. In our digitally enabled world, the need to seamlessly and efficiently connect different economic agents who are buying and selling goods and services is critical.
“The Open Banking Standard is a framework for making banking data work better: for customers, for businesses and for the economy as a whole.”
Welcoming the report that she had commissioned, economic secretary to the Treasury, Harriett Baldwin MP, said: “I am determined to ensure that our financial services remain at the forefront of technological innovation.
“That’s why I asked the OBWG to explore how an open standard for APIs… could be designed to increase competition in Britain’s banking sector, give customers more control over their finances and provide fintechs [ie, financial technology firms] with a globally unrivalled opportunity for innovation.”
She added: “We look forward to continuing to work with industry over the coming weeks to establish how these recommendations will be taken forward… We are on track to cement the UK’s position as the fintech capital of the world.”