The Open Banking Implementation Entity (OBIE), which creates the software standards to connect banks and fintech companies, will transition into a new entity underpinned by a regulatory framework next year.
A Joint Regulatory Oversight Committee – created in March by the Competitions and Markets Authority (CMA), Financial Conduct Authority (FCA) and Payment Systems Regulator (FSR) – has been exploring the best model to oversee the future of open banking in the UK.
The current plan is to create a new entity to ensure open banking remains competitive, provide technical infrastructure and ensure compatibility between industry players.
The OBIE, established in 2017 to implement open banking, is currently overseen by the CMA.
In the interim, the future entity is expected to be overseen by the open banking committee and the CMA before establishing a “long-term regulatory framework for open banking” underpinned by necessary legislation.
The next update, which will outline the recommendations for the future open banking entity, will come before April 2023.
In a joint statement, committee co-chairs Sheldon Mills and Chris Hemsley, of the FCA and PSR, respectively, said: “Open banking and its future continue to be a priority for the FCA and the PSR. Together with the committee and industry, we are committed to its continued growth and evolution. Fully realised, open banking and then open finance can bring further benefits to consumers and businesses and will help the UK become more competitive and innovative.”
Since the Open Banking directive – sometimes known as PSD2 – came into force in January 2018, the UK’s biggest banks have been forced to make their data available in a more standardised format.
This has allowed third-party developers to use open APIs to build applications around financial services, such as a chatbot that tracks a consumer’s spending at a separate institution.
Fintech companies and challenger banks, such open banking loan provider Updraft, have subsequently built business models that have contributed to the success of the UK’s fintech industry.
In June, open banking hit a six million active user milestone.
Read more: Why scrapping the 90-day rule is a big step forward for open banking