U.K risks losing global leadership spot in open banking as market competition rises 

By Onome Amuge 

The UK, reputed as a global leader in the adoption and operation of open banking, is at risk of losing its top position within the financial services term in 2023 unless drastic action is taken to boost operations, according to a new global finance index report by Open Banking Excellence (OBE).

The report, which included contributions from Accenture and NatWest with support by research from the University of Oxford and data from the World Bank analysed 23 countries across more than 150 aspects to identify the component parts of a successful open banking ecosystem.

It found that though the UK has led the open banking sector, buoyed by the required technology, experience,skills and competitive advantage, other countries like Brazil, Singapore, India and Australia are gradually keeping pace and likely to eclipse UK’s enviable position.

This, according to the report by the world’s leading community of open banking and open finance pioneers, is fast becoming a reality as other markets, spurred by the ability to learn from the UK’s experience, are developing at a further and faster pace.

Another key finding was that while regulatory mandates help nascent ecosystems to establish themselves, it is fundamental that the participants find mutually beneficial arrangements beyond the mandates in order for the ecosystems to thrive.

Open banking, according to industry experts, is a financial services term within financial technology which involves the optimisation of open APIs that enable third-party developers to build applications and services around the financial institution.

Commenting on the report, Helen Child, CEO and founder of Open Banking Excellence, said: “The Open Banking space represents a huge export opportunity for UK firms. UK tech companies have the knowledge and experience to support countries across the world to positively impact their economy, society and environment, whilst at the same time addressing an export-lead market that has been estimated to be worth up to $416 billion  per year by the end of the decade.

“That position is now at risk, due to a stagnant situation at home combined with enormous acceleration in the pace of global competition meaning there’s a real challenge to that leadership position we’ve enjoyed.

In her remarks on the achievements of other competitors, Child noted that India’s roll-out has created a group of more than a billion accounts accessible in the same standard, while members of the  OBE community in Brazil have reached five million connected accounts in one fifth of the time it took the UK. She added that Australia is already forging ahead with open energy innovation, an indication that the UK needs to be more focused rather than rest on its laurels.

In her recommendations, she said the U.K firstly needs to look at open finance with renewed energy. She pointed out that there is a data bill sitting in a drawer in Parliament that could and should be brought forward.

Secondly, she said the country needs to resolve the uncertainty around the future governance arrangements for Open Banking. “We have made great progress but we are not done with this yet,” she noted.

She also emphasised on the need to bake regulatory passporting into future trade agreements.

“If we can take these three steps, then the door is open for UK tech firms to play a leading role in a period that will see a complete paradigm shift in the way people relate to their money. If we can’t, we’ll be watching from the sidelines,” the OBE founder said.

On his part, Amit Mallick, managing director and open finance lead at Accenture, emphasised that  advancements in technology, including APIs, data and analytics, are driving the open finance wave, leading to enhanced and real time financial services experiences for both consumers and businesses.

“Accenture is committed to working with regulators and others to shape standards and support widespread adoption of open finance solutions and ecosystems,” Mallick added.

Speaking on the advancements in open banking, Zack Anderson, Chief data and analytics Officer at NatWest, a leading player in Open Banking said: “At NatWest, we’ve sought to champion the potential of open banking from its earliest days, as we’ve always seen it as being far more than a response to new banking regulations. For us, it’s been an exciting opportunity to create a digitized, API-enabled bank that helps our customers access our services in the ways that are most convenient to them. Now, with the advent of Open Finance, we see an even greater opportunity for industry participants to collaborate and co-create embedded services that drive the digital economy.”

Anderson added that NatWest has played a leading role in the U.K in this regard by creating the ‘Bank of APIs’, an application programming ecosystem that goes beyond the UK Open Banking mandate and is bringing an increasingly wide variety of the bank’s services to customers and partners in new and convenient ways.

The Global Open Finance Index, a report released by Open Banking Excellence is an in-depth, data-driven exploration of the global state of open banking featuring insight from more than 400 Open Banking and Open Finance experts from 23 countries. It builds on the data from a set of expert interviews conducted by the University of Oxford with secondary data from the World Bank, the IMF and Dealroom.co.