UK financial institutions will receive more clarity on Open Banking

UK financial institutions will receive more clarity on Open Banking

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The Open Banking Implementation Entity (OBIE) has published its Operational Guidelines and accompanying checklist to help financial institutions (FIs) better navigate Open Banking, per a press release.

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With the guidelines, the OBIE aims to clarify the regulatory requirements for a dedicated interface, as set out in the revised Payment Services Directive (PSD2), RTS, EBA Guidelines, and Financial Conduct Authority (FCA) Approach documents.

The checklist then helps FIs identify whether they are compliant with the requirements. Both the guidelines and the checklist were drafted with the industry and complement the application programming interface (API) Specifications, Security Profile, and Customer Experience Guidelines that were previously published by the OBIE.

Providing FIs with more clarity around regulation will help adoption of Open Banking.As of January, there are 100 regulated providers enrolled in Open Banking, meaning they are able to offer Open Banking services.

For example, savings marketplace Raisin signed an Open Banking deal with Santander in January, allowing the bank’s clients to share data with the fintech. However, while the share of enrolled providers is up 19% from 84 in October 2018, banks are still not completely embracing Open Banking:

  • More than half of banks say they don’t have enough information to become compliant. Fifty-four percent of banks don’t have enough details about what compliance with Open Banking requires, according to a survey from Fiserv. Hence, offering banks more clarity on the matter will likely help with both compliance and adoption of Open Banking.
  • Last year, the UK’s big lenders were criticized for not launching their own products using Open Banking. Months after the implementation of Open Banking, the big lenders were yet to recognize the benefit of the regulation, which could be partly related to the fact that they don’t fully understand the policy. As such, we might see more FIs launch Open Banking services with the help of the OBIE’s checklist.

It’s been one year since Open Banking was introduced, but regulators are still publishing reports to help FIs comply with the new regulation. The fact that Open Banking is bringing in limited results so far shows yet again how slow big banks are to embrace innovation.

We think that providing FIs with as much guidance and information as possible will help further adoption of and compliance with Open Banking. Additionally, other countries, like Australia and Canada, that are looking to set up their open banking requirements would be wise to provide FIs with appropriate guidance upfront to avoid initial confusion and ensure a smooth implementation.


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