Marion King: JROC’s Open Banking report ‘secures the future’ of UK’s ‘thriving ecosystem’
The Joint Regulatory Oversight Committee’s (JROC’s) recommendations for Open Banking in the UK will “maintain momentum” and mark an “important milestone”, while the industry has reacted positively to the prioritisation of variable recurring payments (VRPs).
Open Banking Limited’s (OBL) ongoing role in the future of Open Banking, as set out by JROC, has also been welcomed.
Todd Clyde, chief executive officer of Token, called it “positive” that the regulator has “identified a clear and continued role for a strong central entity to both maintain and expand the UK’s Open Banking ecosystem”.
“The OBIE has been a key driver of the UK’s success in Open Banking to date, and in particular, in enabling seamless Open Banking-enabled user experiences,” he added.
In the report, JROC revealed its initial thinking about the design of a future entity that OBL will transition to.
Regarding the design of a future entity, the Committee stated in its report published today (17 April) that “disruption to the Open Banking ecosystem and core functionalities currently provided by the OBIE will be minimised” and confirmed that the future entity “will be able to adapt and support future developments beyond Open Banking, e.g., Open Finance and Smart Data initiatives”.
Marion King, OBL chair and trustee, said the release of JROC’s report “secures the future for our thriving Open Banking ecosystem in the UK”.
“In just over five years, the UK’s approach to Open Banking has created a world-leading regulatory framework delivering competition, innovation and, most importantly, real-world benefits to seven million consumers and small businesses,” King said.
“JROC’s recommendations and other government initiatives will allow us to maintain momentum, and for the UK to extend the benefits of Open Banking into other financial services and sectors through Open Finance and Smart Data, benefiting millions more users.”
Charlotte Crosswell, chair of the Centre for Finance, Innovation and Technology (CFIT), also welcomed the publication of JROC’s recommendations on the future of Open Banking.
“Having previously served as the Open Banking Implementation Trustee, I saw first-hand the incredible progress that was made over five years that laid the foundations for driving future financial innovation,” she added.
“It is encouraging to see that there is now the commitment to work across a roadmap of priorities to ensure that Open Banking thrives and evolves in the UK, leads the world in global thought leadership and provides export and inward investment opportunities.”
Andrew Griffith, Economic Secretary to the Treasury, announced today that “CFIT’s first coalition will look at Open Finance and how unlocking financial data can benefit SMEs and consumers”.
Open Banking-enabled payments
In its report, JROC, which is co-chaired by the Financial Conduct Authority and the Payment Systems Regulator (PSR), outlined unlocking the potential of Open Banking payments as one of three priorities to deliver on its vision.
The Committee also identified the promotion of additional services, using non-sweeping variable recurring payments (VRP) as a pilot, as one of five key themes that need to be progressed over the next two years.
Token’s Clyde said: “We are particularly pleased to see regulators recognise the potential of non-sweeping variable recurring payments (VRPs) in their roadmap for Open Banking.
“VRPs are key to unlocking richer Open Banking use cases, such as one-click e-commerce payments and subscription payments.”
He added: “With the total transaction value of all Open Banking payment transactions in the UK projected to surpass $82 billion by 2027 (from $13.6 billion in 2022), we expect the availability of non-sweeping VRPs to be an important catalyst for the adoption of Open Banking-enabled payments.”
According to JROC, developing new payments functionalities “featured prominently in the SWG discussions and our wider engagement, highlighting the opportunities presented by extending Open Banking payment capabilities”.
Hiroki Takeuchi, co-founder and chief executive officer of GoCardless, called the report released by JROC “an important milestone in the UK’s Open Banking journey”.
“We welcome JROC’s prioritisation of the roll-out of variable recurring payments (VRPs) so that more UK businesses and consumers can benefit from them. I’m also pleased to see a focus on technical, but important, issues which need resolving in the background,” he added.
The Committee also provided some clarification around the UK’s New Payments Architecture (NPA) and how that fits with its vision and roadmap for Open Banking, with the PSR to continue to monitor Pay.UK’s work to deliver the NPA and to ensure that “developments in Open Banking are compatible with the transition from Faster Payments to NPA”.
“We expect that Pay.UK and the OBIE (and the subsequent future entity) will need to coordinate closely to consider open banking developments and how those impact the obligations Pay.UK puts on Faster Payments (and later NPA) participants,” JROC said in its report.