Fintechs call for open banking body to be ‘armed’ and simplified as CMA mulls its future

Wednesday, March 16, 2022 6:15 a.m.

Charlotte Crosswell, patron of the Open Banking Implementation Entity (OBIE)

Fintech firms have called for the open banking enforcement body to be ‘armed’ and simplified as the Competition and Markets Authority (CMA) prepares to deliver a verdict on its future next week .

Open banking was introduced in 2018 to unleash data sharing and boost competition in finance, and the technology has been touted by fintechs as key to driving innovation in the sector.

But calls for clarity on tech governance come after a group of 26 fintechs on Monday criticized the CMA for dithering on key decisions and failing to define the role of the implementing entity. Open Banking (OBIE), despite holding a consultation on its future last time. March.

City AM understands that the CMA is now set to issue a verdict on open banking governance and the long-term future of the OBIE next week.

Yapily, a leading open banking infrastructure builder who signed the letter to the CMA on Monday, said AM City yesterday that the OBIE would be the key to the success of open banking.

“With the OBIE, we have had the most progressive and focused implementation entity in Europe to help open banking get off the ground,” said Iain McDougall, Chief Commercial Officer.

“I think they’ve set the standard from a European base in terms of what’s needed to implement a new regime and an ecosystem like this.”

But he warned that a “network” of regulators overseeing open banking was beginning to hamper its rollout.

“It’s time we had some clarity, and some simplification, around the roles and the different types of regulatory bodies and entities at play in this ecosystem,” he said.

The Treasury, CMA, OBIE, payments system regulator CMA9 (the UK’s nine largest banks) and the Financial Conduct Authority have all played a role in the technology so far, and the OBIE patron Charlotte Crosswell said AM City last month that regulators’ “spaghetti soup” needed to be streamlined.

The boss of payment processor Crezco, another signatory to the letter on Monday, said the OBIE needed to be strengthened by regulators if open banking was to meet the standard expected by the industry.

“Original open bank payments still do not meet expected standards, but no banking service providers have been reprimanded. Why? Because the overseer, the OBIE, has not been given any authority,” Ralph said. Rogge, founder of Crezco.

“Even if they wanted to do something, the harshest punishment they could prescribe is ‘feedback’. A sheriff needs a gun, not just a badge. Arm the OBIE or hand over control to the CMA or the FCA.

The OBIE has, however, been rocked by a number of internal bullying and harassment scandals, with former Innovate Finance boss Crosswell called in to clean up his reputation last year.

An investigation into the incidents revealed that the CMA and CMA9 needed to take their share of responsibility, and the CMA said the findings would be taken into consideration when deciding on the future structure of open banking governance, alongside responses to consultation.

Adam Jackson, director of policy at fintech industry body Innovate Finance, said AM City. this uncertainty about the future of the OBIE was holding back innovation in fintech.

“We need to find an approach that both strengthens competition in the market, solves outstanding problems and triggers a new wave of innovation,” he said. AM City

“In particular, enabling products that could offer real benefits to struggling consumers and savers as we face a cost of living crisis.”

Jackson said Innovate Finance raised concerns with the CMA about its planned structure for open banking governance last April, on grounds of competition and independence, innovation and sustainability.

Charlotte Crosswell, president and trustee of OBIE, told City AM that progress in open banking has been significant so far and it is important for the industry to move forward.

“It is vital that we must maintain the momentum, and we must not lose the expertise and knowledge we have gained within OBIE and the wider ecosystem,” she said. .

“We must maintain the UK’s position as a leader and leverage open banking assets, infrastructure and technology to help provide open funding and drive growth in other sectors as the initiatives of intelligent data is uploaded.”