Made in Britain: The world’s first public sector Open Banking use case
11:17 09 Aug 2023 Personal memories of working on the team which created a world-leading Open Banking payment option for HMRC, Britain’s tax authority
It’s not often that you get a chance to make history. Just over two years ago, that’s exactly what my team at His Majesty’s Revenue and Customs (HMRC) achieved when it delivered the world’s first public sector Open Banking contract in record time.
In 2020, HMRC became the first public sector organisation anywhere on the planet to issue a tender for Open Banking services, which was awarded to a (then) startup called Ecospend after a robust public procurement process. On March 24th, 2021, the very first “Pay By Bank Account” tax payment was made. At the beginning of 2023, HMRC announced that it has been used to process 4.5 million tax payments worth roughly £12 billion – which is truly extraordinary.
The Road to HMRC
Open Banking launched on my birthday. So perhaps I was always destined to be involved in this sector! Yet that wasn’t where my career began. I first made the transition into financial services when I joined HMRC’s commercial team.
I got the job completely unexpectedly. At the time, I was comfortable in my current position but decided to go for it, as I had nothing to lose. However, the senior recruiter hinted that I might not be the ideal fit for the job, and he expressed curiosity about why one of his associates had reached out to me. Eventually, he consented to represent me as a potential surprise candidate, yet he did inquire about my comfort level in an organisation led by “middle-aged men in grey suits.” That lit a fire in me…
Following a lengthy and laborious selection process, surprise, surprise, I got the job despite being eight months pregnant at the time. So after accepting, I went through maternity leave and the whole shebang, before re-joining my old employer to finish my notice period. Luckily for me, HMRC were very accommodating and agreed to wait.
I was excited and all set to tackle the challenging task of developing a commercial strategy for professional services, or so I thought… After I confidently handed in my notice, I was hit with the news that I would be leading HMRC’s financial services commercial strategy, with no prior precedent to guide me and at the time over £700bn of tax revenue in the mix (no biggy…). And what a life-changing and eye-opening experience it turned out to be!
Joining the Civil Service, sometimes referred to as ‘the land of red tape’, revealed a remarkable opportunity. Despite critics’ opinions on its practices, workforce, and culture, my personal experience was overwhelmingly positive, and I genuinely relished my time there. Sure, challenges and hurdles arose, but what truly motivated me was the people and the ‘green light’ to disrupt the status quo in a positive manner. Adapting to a robust corporate culture and abiding by the ‘Civil Service way’ added its own flavor, but the reward of making a tangible difference for the UK public was undeniably fulfilling.
First Steps
After joining HMRC, I initially focused on building relationships with key stakeholders, such as the famous Nick Down, a pioneer of Open Banking, and the Government Banking Service, which provides that single voice to the government when it comes to banking and payments.
Once the basics were put in place, I started becoming involved in the innovation and policy areas of HMRC, meeting the people who were designing tax policy in the UK. I was thinking a lot about how commercial strategy can positively influence public policy and vice versa to ultimately drive better outcomes for the British public, as well as how to position the department as a tax authority with an innovative edge.
Perhaps unfairly, people don’t always associate HMRC with bright, bold new ideas. Yet I became involved in a lot of innovative projects at HMRC, some potentially groundbreaking, which sucked me in more and more.
When did HMRC introduce Open Banking?
During my time at HMRC, I had the pleasure of collaborating with a remarkable group of dedicated and brilliant civil servants. They not only inspired me to constantly strive for excellence but also became my mentors, friends, and endless sources of motivation.
One of the most professionally impactful projects I had the opportunity to be a part of was the procurement and implementation of open banking in HMRC – which was a first in the world! Working alongside the esteemed Open Banking pioneer, Nick Down, and his incredible team, Rachel, Melanie, Leigh, and other invaluable colleagues and partners, I witnessed firsthand how a desire to drive better outcomes for the tax payer and the public purse can transform teams, organisations, industries and beyond.
Nick Down and his team first started to explore Open Banking in the early days after PSD2 took effect in the UK. It is crucial for HMRC to offer a wide variety of payment types to its customers. However, it is no secret that some payment methods are more costly than others. As a public sector organisation relying on public funds, value for money must be at the heart of everything it does. So initially, Open Banking was a cost-efficiency initiative.
As such, the priority use case was payments. As part of the project, we considered a number of commercial strategies on sourcing payment initiation services (PIS), conducted a thorough analysis of our options and validated our ideas and understanding by undergoing a market engagement exercise (my very first fully virtual commercial project, thanks to the pandemic). At the time, there was a growing pool of providers in the marketplace that would be very excited to win this contract and work with such a huge merchant. Their enthusiasm and knowledge sharing accelerated the project and enabled us to deliver the contract in a reasonably short space of time. Also, a huge shout out to my former colleagues in HMRC Sourcing (you know who you are)!
In the early stages of Open Banking strategy development, the focus was on PIS, but in order to future-proof the provision we decided to include account information services (AIS). I was delighted that we incorporated that capability into the contract, as, in my view, it would allow us to explore the full potential of Open Banking.
It is no surprise that public bodies face a lot of public scrutiny. To this effect, every novel project or initiative must undergo a very thorough assessment to make sure it will not only deliver the intended benefits for the taxpayer and the organisation but also ensure that it does not introduce any unnecessary risks and/or unintended consequences.
However, in the case of Open Banking, it was actually relatively straightforward to get buy-in from senior staff given all the positive evidence we had gathered to support the business case. After the tender closed and the provider was appointed, the whole implementation process took just eight weeks, which is a huge achievement for any public sector organisation and particularly HMRC itself, which had a complex infrastructure. The fact we were able to deliver Open Banking in such a short space of time was remarkable. We went live with no teething problems. It just worked.
At HMRC, we were proud to have accelerated the adoption of Open Banking across sectors and feel we played a big part in raising trust in and awareness of Open Banking which has greatly contributed to its exponential growth in the UK.
Beyond Payments
In my view, payments are only a small part of the improvements Open Banking can offer in the public sector, which serves a very wide population of customers. After all, everyone is a customer of at least one public sector organisation, whether that involves paying your council tax or renewing your driving license.
I strongly believe the real value for the public sector lies in data. AIS will deliver substantial value in the future as we move into Open Finance and Open Data. It can be a game-changer across the public sector.
Looking back at the Open Banking delivery, it is important to note that an organisation like HMRC which collects over £800 billion a year in tax revenue chose to deal with a small but promising start-up. It speaks volumes about HMRC and Westminster in general. This project is a really good example of opening up opportunities for SMEs to win government business. Our procurement process was designed in a way that ensured fairness, transparency and non-discrimination against the size or previous experience of the organisations (given the maturity of the market) and assessed the bidders solely on their capability and capacity to deliver the services to HMRC. On the world stage, that stands out.
When I worked at HMRC, I got the clear impression that other jurisdictions were following in our footsteps and looking to us as a beacon of innovation. The amount of competition we saw for the tender was also quite astonishing. It just goes to show that we have a very healthy ecosystem within the fintech space and wider financial services. HMRC is often regarded as never trying to be the first to do anything. The fact that Open Banking strategy was heavily supported internally within HMRC shows that the public sector in Britain is actually open to driving innovation and taking calculated risks to improve citizen experience and deliver value for money. It proves we are ready to be bold and brave.
Life After The Public Sector
Since joining HMRC I have become a huge champion of Open Banking and its ability to transform and even revolutionise financial services. This is why I decided to join the market leader in open banking – Ecospend, a Trustly company. When the opportunity came up I simply couldn’t help myself but grab it with both hands and run with it. It’s still early days but so far it has been both transformational and a little scary at the same time. The first thing that was a culture shock for me was that there was free coffee and snacks available. I still feel a bit guilty for drinking a coffee without having to pay for it!
In my journey from public procurement to fintech, I encountered a language barrier of epic proportions. In the public sector, I was fluent in ‘Bureaucratese’, the art of speaking in acronyms and using words that were carefully thought through to ensure the messages “landed well”. But in fintech, I had to quickly learn the mother tongue of ‘give it to me straight’. Being from an Eastern European background where our usual directness can be taken for rudeness here in the UK, I must say, ‘saying how it is’ is much closer to home.
Whilst there are certain aspects (and people) I miss from my time at HMRC, I feel I am exactly where I need to be and I am so excited about what the future has in store for me, the Ecospend team and the Open Banking community in the UK and beyond.
They say change is the spice of life, and boy, did I sprinkle some serious chili through the years. A journey from a very small town in Lithuania to the Fintech capital of the world. A career that started with purchasing loo rolls (not kidding) to driving public sector strategy for the world’s first open banking provider to government. In the UK, I think we will only go from strength to strength. I feel honoured to have played a part in delivering the world’s first public sector Open Banking use case – and look forward to seeing many more, this time from the supply-side.
Disclaimer:
The views and opinions expressed in this blog are solely those of the author and do not represent or reflect the views, opinions, or official stance of any company or organisation. Any information, ideas, or perspectives shared are based on the author’s personal experience, knowledge, and research.
This blog is intended for informational purposes only and should not be construed as professional advice or endorsed by any entity.
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