#OpenFinanceInFocus: collaborating to deliver the blueprint for Open Finance

By Ezechi Britton MBE, CEO, Centre for Finance, Innovation and Technology (CFIT)

This blog kicks off our #OpenFinanceInFocus series, a collection of articles highlighting the progress of our inaugural Open Finance coalition, which aims to drive forward secure data-sharing across the entire financial ecosystem and, in doing so, deliver transformative change for individuals and SMEs across the UK.

In subsequent articles, you’ll hear directly from our working groups on what we’re working on, the progress we’re making and, most importantly, our priority outcomes.

Historically, the concept of ‘finance’ related almost exclusively to money. But, today, finance is just as much about the technology and data underpinning the services offered to consumers and businesses.

Open Banking is a classic case in point. Ever since PSD2 came into force across EU member states in 2018, requiring British banks to share their customers’ transactional data securely with trusted third parties, the resulting data-sharing ecosystem has transformed the payments sector.

The specific approach for implementing PSD2 pioneered in the UK quickly won approval around the world, having given a major boost to innovation and competition in the payments and banking sector. These data-sharing standards have now been adopted in various forms in 80 countries globally.

But as Open Banking touches upon only one aspect of consumers’ and corporates’ financial journeys, there is an urgent demand to extend similar insights and efficiencies into areas such as lending, savings, pensions and insurance.

As the birthplace of Open Banking, the UK has already proven that it could lead the world here as well. More to the point, it’s imperative that it does so.

There is a substantial prize on offer for whoever sets the global strategic direction for the secure sharing of all types of financial data. Interoperable standards for payments and data will enable fintech companies to more easily scale into overseas markets.

Conversely, it would be a major missed opportunity if other markets move faster and set global standards. For the UK’s fintech industry, it’s a simple choice: be a rule-maker now or a rule-taker forever.

It’s for this exact reason that, earlier this year, CFIT launched its first coalition, dedicated to Open Finance. Our aim is to drive financial innovation, consolidate the UK financial services and fintech industry’s world-leading position and deliver transformative changes for both individuals and SMEs across the UK.

Since the coalition was formed around six months ago, we now have over 50 fintech and financial services companies as well as industry bodies from across the UK, all working together towards a blueprint to enable the transition to Open Finance.

To show the impact of increased data ownership and data sharing, the first phase of the Open Finance coalition is focusing on showcasing how to deliver more accurate and accessible credit records and the positive impact this can have on credit decisioning. We have been examining the kind of data that could be shared so both individuals and SMEs can make more informed credit-related decisions. We’re already in the middle of developing use cases for consumers and businesses that will demonstrate the positive impact data can have on credit scores. This is particularly relevant at a time when we’re all grappling with the increasing cost of living.

It will also be a crucial stepping-stone to opening up data in other parts of the financial sector such as savings, insurance, investments and pensions.

This focus on real-world use cases exemplifies a key principle of CFIT’s work. We are not a talking shop. All our work is geared towards generating tangible outcomes and practical solutions with demonstrable value.

Those might range from actionable recommendations for industry, government and regulators, to proofs of concept for ground-breaking technologies that industry can build on. In fact, supporting our stakeholders to implement recommendations and to scale and commercialise prototypes will be the explicit objective of the coalition’s second phase.

Crucially, the work we’re doing plays right into some of the UK Government’s biggest legislative priorities. The upcoming Data Protection and Digital Information Bill (DPDI) will lay the foundations for a smart data roadmap in the UK. The Department for Business and Trade’s Smart Data Council is seeking to deliver a cross-government vision for a Smart Data Economy. In both cases, a burgeoning Open Finance ecosystem, within which companies can securely share every different type of financial data generated by consumers and corporates, will be fundamental to their success.

This blog kicks off our #OpenFinanceInFocus series, highlighting the progress that CFIT’s inaugural coalition has made so far in advancing these goals.

We’re delighted that in subsequent articles, you’ll hear directly from our working groups about what they’re working on – whether focused on consumers or on SMEs, what we’ve achieved and, most importantly, our priority outcomes.

In the transition to Open Finance, the race is on. At CFIT, we want to make sure that the UK is first across the finish line.