Landmark CFIT Report Delivers Kalifa Review Recommendations on Open Finance

  • Industry-wide coalition publishes report on how to drive forward secure data-sharing across the financial services industry to benefit consumers, SMEs, fintechs and financial institutions
  • ‘Proofs of concept’ developed with Citizens Advice and HSBC UK demonstrate applications of Open Finance in providing financial advice to consumers and enhancing SMEs’ access to credit
  • Recommended next steps include developing Open Finance roadmap, empowering accountable body for Open Finance and identifying viable commercial model for secure data-sharing

London, 29 February 2024 – The Centre for Finance, Innovation and Technology (CFIT) today publishes a report setting out the full potential of Open Finance to deliver direct benefits for UK consumers and businesses. The findings show how better data-sharing can provide improved access to credit for companies and swifter, more effective financial advice for consumers.

A CFIT-led coalition of more than 60 partners – including Citizens Advice, Experian, EY, the FCA, FDATA, HSBC, IBM, Iwoca, KPMG, Lloyds Banking Group, Mastercard, Monzo, Revolut and various regional association and industry bodies – worked together to develop new solutions unblocking barriers to secure data-sharing across the financial services industry. Alongside a strategy for the future of Open Finance, which allows consumers and SMEs to access and share a wider range of their financial data, CFIT today publishes two ‘proofs of concept’ developed by the coalition that show the full potential of this technology.

  • A dashboard produced with Citizens Advice has shown how enhanced data-sharing could provide tailored financial advice to 40% more consumers facing financial difficulties and distress – supporting an extra 150,000 people annually. The proof of concept sets out how Citizens Advice clients could choose to seamlessly share financial data with the charity, freeing advisors from lengthy data collection and analysis, and giving them more time to offer advice.
  • A successful pilot analysis with HSBC UK showed that Open Finance could deliver more lending to SMEs. It demonstrated that accessing new datasets and auto-populating business loan applications can lead to a significant boost in lending decisions. The exercise suggested that over a quarter of businesses in a sample of SMEs whose loan applications had been referred for manual underwriting, and who risked missing out on credit, could be given access to finance, had Open Finance been in place. The work – which used synthetic data and profiles of SMEs based on HSBC business customers – also showed that embracing Open Finance could lead to a fall in the number of businesses that give up on applications before they are complete.

These proofs of concept will now be released to the UK fintech and financial services industry to be built into fully fledged prototypes. Today’s publication also delivers the new partnerships and blueprint for Open Finance previously called for by the Kalifa Review of UK Fintech.

CFIT – a body created last year on the recommendation of the Kalifa Review – sets out a series of recommendations to unlock the estimated £30.5bn of GDP growth that Open Finance and personal data mobility could provide. These include the development of an Open Finance roadmap as part of a long term regulatory framework, as well as an implementation entity empowered to drive this work forward, which could be modelled on the successful model of Open Banking in the UK, led by Open Banking Ltd (OBL -formerly OBIE). The Joint Regulatory Oversight Committee and OBL will be setting out their plans, including a proposal for a new implementation entity to deliver non-CMA Order work, and a vision for the future delivery of open banking and beyond at the end of Q1.

Other recommendations within the Coalition’s report include:

  • Setting up a taskforce to build on the Coalition’s work in prioritising other ways that Open Finance can deliver better outcomes for businesses and consumers beyond credit. Other potential use cases identified include retirement and pensions, savings and investments, Digital ID and cash flow management.
  • The development of a viable commercial model to incentivise businesses to securely share financial data, echoing JROC’s work on design principles for a future entity and the recently published Future of Payments Review.

Ezechi Britton, CEO of CFIT, said: “The prize on offer from getting Open Finance right is enormous. For consumers and SMEs, it means more control of your finances and easier access to more affordable credit. For the fintech sector, it is an opportunity for the UK to set global standards and drive growth worldwide. And it dovetails perfectly with the Government’s wider ambition to build a Smart Data economy. We would like to thank our coalition partners for their outstanding work so far. Having definitively proven the business case for Open Finance, we’re now looking forward to working with government and industry on furthering the case for unlocking the necessary datasets, scaling the proofs of concept developed by the Coalition, exploring use cases beyond credit and identifying the commercial model and future framework that will encourage secure data-sharing across financial services as we embrace Open Finance.”

Bim Afolami MP, Economic Secretary to the Treasury, said: “I’m delighted to see the progress that CFIT has made in unlocking secure data-sharing across the financial services ecosystem, and excited by the transformational impact this could have over the coming years. It’s encouraging to see a broad cross section of industry and the third sector come together to shape the future of Open Finance. The establishment of CFIT demonstrates this government’s commitment to innovation in financial services, and I look forward to working closely with them as they drive forward the next phase of their strategy.”

Chris Hayward, Policy Chairman, City of London Corporation, said: “As the world’s leading financial innovation hub, the City of London Corporation recognises the transformative potential of Open Finance for the UK economy. Through its inaugural coalition, CFIT is showcasing the power of leveraging financial data to deliver better financial outcomes for both consumers and SMEs. We are committed to supporting smart data initiatives such as the one taken by CFIT to promote innovation, give consumers more choice, and build a resilient financial ecosystem. Overcoming barriers requires collaboration between regulators, financial institutions, fintech companies, and other stakeholders, making CFIT’s Open Finance Coalition a success.”

Discover more about the Open Finance Coalition and the Open Finance Blueprint