CFIT’s Q1 2024 Progress Update

Ez lays out the opportunity for Open Finance in his opening
and closing remarks at CFIT’s Showcase

It’s been a busy and delivery-focused period for CFIT since our last newsletter update in late 2023. This new edition will provide you with a detailed overview of our work up to the end of Q1 2024 and sight of our key milestones for Q2, when the next update will be published.

As most of you will know, our inaugural coalition on Open Finance published its Blueprint Report on 29th February at our Showcase event. The report was a culmination of the huge amount of effort and time committed by our 60+ coalition partners. It sets out a clear strategy and recommendations for how industry and government can work together to deliver greater benefits to both consumers and businesses through Open Finance.

Since February, we’ve been building on this momentum, and as the industry convened at the tenth annual Innovate Finance Global Summit (IFGS) in London on 15th-16th April, we were pleased to share the achievement of some key milestones for CFIT and its overall delivery programme.

The first of these announcements was the launch of an Open Finance Taskforce – announced by the Economic Secretary to the Treasury, Bim Afolami MP, and chaired by CFIT, with Charlotte Crosswell undertaking this role – which is dedicated to advancing the next steps on Open Finance in the UK.

The second was CFIT’s announcement that we will continue working with some of our key partners to roll out two pilot initiatives that scale our core proofs of concept into working prototypes in some of the UK’s key regions.

2024 has started off at a frenetic pace for CFIT and we are continuing to drive and deliver financial innovation. This would of course not be possible without all those who support our work.

In conclusion, I would like to offer my sincere thanks for the help of our partners and contributors from across Government, the City of London, academia, and the financial services sector.

Without your help, we would not have been able to achieve so much, so soon, in the service of the UK’s SMEs and financial services consumers.

Ezechi Britton MBE, CEO of CFIT

What a Week: Two Major Progress Updates for CFIT at IFGS

Key stakeholders across financial services will collaborate in the new Taskforce
to build on the work of CFIT’s coalition and support the wider rollout of Open Finance

Launching a Taskforce

Those who were able to attend IFGS may have caught the opening remarks by the Economic Secretary to the Treasury, in which we were delighted to be referenced as one of the key organisations driving financial innovation forward. What’s more, the Minister made the landmark announcement of a new industry-led taskforce to lead the way in unlocking the full potential of Open Finance.

Meeting a core recommendation set out by CFIT’s Blueprint Report in February, the Taskforce has the mandate to identify and prioritise more Open Finance data sets and APIs to facilitate greater access to finance for the UK’s SMEs. It will also identify commercially viable approaches to incentivise businesses to securely share their financial data, before considering appropriate next steps towards implementing any agreed recommendations.

Together with the Treasury, the Taskforce will build on the collaborative work of our coalition – allowing us, along with industry, government, and regulators, to further explore how financial data can be safely unlocked to improve SMEs’ access to credit. We’re immensely proud of the work and collaboration we’ve put in to help make this happen, and excited about the new capabilities this Taskforce will bring.

From proof to prototype

At IFGS, we were also thrilled to announce two pilot initiatives that will scale the core proofs of concept our coalition shared in February’s Blueprint Report. The initiatives, run in collaboration with leading retail banks, credit agencies, fintech firms and Citizens Advice, will serve as a precursor to the broader adoption of Open Finance nationwide.

Following the launch of the Taskforce, CFIT chairs its inaugural meeting at IFGS

To share more detail:

Leveraging the insights derived from the data-sharing dashboard by our Open Finance coalition, Citizens Advice (CA) and CFIT are delivering initial industry-driven pilots, with Experian in CA Stoke and North Tyneside, in addition to the CA pilots already completed by Aperidata and PayPoint in CA SORT (Stockport, Oldham, Rochdale, Trafford). These pilots will enhance the help available to vulnerable consumers by empowering CA teams to access financial data speedily and securely, with a client’s consent, and advise on their critical financial needs. In practice, this will significantly boost CA’s capacity and capability to deliver help to greater numbers of vulnerable people. CA has further centres that are ready to pilot this technology and is actively seeking support from the financial services sector to make this happen. By coalescing delivery partners such as Credit Canary, CRIF, and Atto, and with support from potential funders, CFIT hopes to help CA roll out this Open Finance solution across all its centres, improving productivity and the services that it can offer with the available resources.

Building on the successful pilot analysis we ran with our partners last year, SME lenders, will design and implement Open Finance solutions that will accelerate SME credit assessment and loan decision-making. This will aim to make headway in accessing new datasets and auto-populating business loan applications, which can lead to a significant boost in lending decisions.

We will keep you fully updated on the progress of these initial pilot projects and look forward to hearing about their success throughout our national partnership network.

Reflecting On the Open Finance Coalition and Showcase

A fantastic roundtable moderated by Stephen Ingledew OBE (CFIT) and joined by Christoph Rieche (iwoca), Jasjyot Singh OBE (Lloyds Bank), Janine Hirt (Innovate Finance) and Andrew Reiskind (Mastercard) makes the case for deeper industry collaboration

Madush Gupta – NED at CFIT and Common Councillor and Policy Lead for Innovation and Technology at the City of London Corporation – shares his opening remarks

It seems like a long time ago now, but given the significance of the milestone, it is worth taking a moment to highlight CFIT’s work throughout our first coalition and during the launch of our Blueprint Report in February. This report detailed a compelling case for how better data-sharing would provide improved access to credit for businesses and swifter, more effective financial advice for consumers.

The recommendations were:

  1. Develop the SME proof of concept further to help startups and established businesses secure access to finance for investment and growth purposes.
  2. Develop the vulnerable customer proof of concept into a full working prototype to enable those financial services consumers to get the incisive assistance that they need.
  3. Identify a commercially viable approach to incentivise participants to share financial data to ensure efficient customer focused services for financial services consumers.
  4. Empower an accountable body to advance the Open Finance agenda to ensure that it is brought to fruition with speed and effect.
  5. Set up a Consent and Authentication working group to bring all individual consents together into one place, enabling greater synergies and ease of access for consumers.
  6. Establish a taskforce to prioritise the development of Open Finance Application Programme Interfaces (APIs) to run in parallel to the current Open Banking JROC workstream, ensuring that they can be defined and achieved.

Open Finance Coalition Showcase Day Video

Midway through the event, the Economic Secretary to the Treasury, Bim Afolami MP, gave a keynote speech that focused on how the UK could sustain and grow its leadership in fintech on a global scale.

This was followed by a brilliant roundtable, moderated by Stephen Ingledew OBE (CFIT) and joined by Christoph Rieche (iwoca), Jasjyot Singh OBE (Lloyds Bank), Janine Hirt (Innovate Finance) and Andrew Reiskind (Mastercard). During this session, the speakers shared their vision for Open Finance in the UK and talked about how industry collaboration is a catalyst for accelerating innovation.

Finally, our CEO Ezechi Britton and Nayan Singh (HSBC) closed off the event – held in HSBC Innovation Banking’s own headquarters – by setting out the Open Finance opportunity ahead of us and the next steps to make it a reality. If you missed any of it, do take a look at our video from the day.

Our sincere thanks to everyone who joined us for the event and contributed to the coalition’s success. Your comments, thoughts and contributions were crucial in finalising our Blueprint and findings. If you haven’t had the opportunity to take a full look, you can find our report here.

The Proofs of Concept: A Deep Dive

CFIT’s Director of Coalitions and Research, Leon Ifayemi, discussed the Open Finance coalition’s proof of concepts at our Showcase with Will Turner (HSBC), Ralph Wensley (IBM), Jake Beavan (Citizens Advice) and Sam Coe (Experian)

At the core of our coalition’s Blueprint Report were two key proofs of concept, designed to demonstrate the extent to which access to additional data sets can help deliver better financial outcomes. We’ve already covered some of the ways in which we’re driving these forward through our pilot initiatives, but it’s worth taking a moment to inspect how they came together under our Open Finance coalition in the first place.

The first proof of concept, an SME lending dashboard to assess how additional data sources can improve access to credit, was built alongside HSBC. To pilot the initiative, HSBC selected a representative sample of SME lending applications from a wide range of sectors. Our coalition then developed a prototype solution which aggregates SME data to auto-populate companies’ lending applications, drawing on data sources such as Open Banking, Companies House and HMRC data sets in order to provide a comprehensive financial picture of the SME.

HSBC then conducted a desktop review exercise with their credit teams to measure the value of unlocking additional datasets through Open Finance, and the benefits that Open Finance can offer their SME customers. The results indicated that over 25% of SME loan applicants who had been referred for manual underwriting and would potentially have failed to receive an offer of credit, could justifiably be given access to finance. The next step to drive forward industry-led initiatives will involve drawing from existing sources of proxy data, with the aim of achieving positive outcomes for SMEs over a realisable period that meets their lending needs.

Complementary to this first proof of concept was our coalition’s additional case study with iwoca, involving comprehensive desktop exercises which examined how we can reduce friction in the lending process. Based on the assessment of CFIT’s proposed consent flow and authentication model, our working groups envisioned significant improvements to the lending process and found that giving small business owners greater control of their data through Open Finance will lead to a more effective experience for all.

Secondly, and working in partnership with Citizens Advice, Aryza, Atto, Experian, esynergy and other coalition partners, CFIT developed a prototype dashboard to illustrate how Citizens Advice could optimise their operational processes to provide greater volumes of tailored financial guidance to consumers in vulnerable circumstances.

Our coalition started with a desktop review study, which considered our proposed model designs for secure, consensual sharing of a consumer’s financial data and synthetic data aggregated by our partners, such as CRIF. The data points we aggregated could auto populate the Standard Financial Statement (SFS) that Citizens Advice customers are required to complete with 540 data points (90% of the SFS), minimising the need for manual input and thereby mitigating issues such as outdated figures or incomplete financial pictures.

The prototype dashboard showed the potential to help alleviate capacity constraints on Citizens Advice, which assisted 370,000 people in the past year but received c.1.5 million calls, demonstrating the overwhelming demand for debt support. With 30% of adviser time spent on manual assessments, the dashboard could help meet the pressing need for scalable solutions and greater efficiency in providing debt advice.

Citizens Advice estimates that the dashboard could reduce the time its staff spends on data collection and assessments by two-thirds, allowing them to assist up to 150,000 additional people annually. This is significant, as Citizens Advice estimates that it helps clients gain an extra £1,000 a year, on average.

At Events and in the Media

Ez delivers the opening keynote at UKFAN’s Annual Conference on how we can drive fintech forwards

Our team has been active as ever, speaking to key titles to raise awareness of our coalition’s work and other key opportunities and challenges facing fintech.

Ez recently spoke at this year’s UKFAN Conference, where he delivered a call-to-action, encouraging the fintech industry to evolve the sector using the power of research and empirical evidence. Meanwhile, Charlotte addressed the PIMFA Women’s Symposium, receiving a positive reception from all who attended.

At IFGS in mid-April, CFIT took to the stage to contribute to key industry discussions around our own announcements. Ez joined a fireside discussion with Parveen Kaur (Innovate Finance) to reflect on CFIT’s first year and what the future holds, while Charlotte shared her insights on making Open Finance a reality in a panel discussion. Charlotte and Ez were also interviewed in the margins of the conference by City A.M. and Finextra – stay tuned for links to these soon.

Charlotte discusses what’s next for Open Banking and the evolution
of Open Finance on a key panel at IFGS

Back in March, Charlotte penned a piece for UKTN breaking down the impact Open Finance will have on the industry, SMEs and on individuals, leading to better financial outcomes for all.

Building on this, Ez sat down with Jake Beavan from Citizens Advice for an interview with Digital Frontier, which led to some fantastic coverage of our Proof of Concept for vulnerable consumers.

We’d recommend giving Ez’s Q&A for The Paypers a read too, which goes into further detail about what the next steps of Open Finance may look like nationwide.

On the day of our Showcase, Ez was interviewed by the team at City A.M., during which he encouraged the UK to embrace Open Finance in order to consolidate its global leadership position in fintech and boost IPO activity. On the same day, Finextra spoke to Ez about the key takeaways from the Blueprint Report.

CFIT Team News

We would like to take a moment to celebrate our Chair, Charlotte Crosswell, who was recognised for her impact on our industry when she was awarded the prestigious Industry Achievement Award 2024 at the Card & Payments Awards. Charlotte’s vision continues to inspire us all at CFIT, as we strive to drive forward excellence in the world of banking and financial services.

Closing Words

It has been satisfying to take a moment to reflect on the work of the coalition and our team over the last few months. Needless to say, we’d like to extend a huge thank you to our coalition partners, working group members and supporters for their work. From the initial research stages to our latest announcements at IFGS, the insights and expertise of our coalition have been mission critical. It’s this spirit of collaboration and innovation that sets CFIT apart and ensures we continue to drive forward the UK’s leadership in the fintech sector.

Behind the scenes, efforts continue at pace, and we look forward to keeping you all updated in the coming months. We have proven the case for Open Finance; now it’s time to bring it to fruition and widescale adoption across the UK.