To say that the Open Banking sector in the UK has been eagerly awaiting the contents of the Joint Regulatory Oversight Committee (JROC) report is an understatement. During a period where, at times, it felt like the momentum that the sector had built up was beginning to fall away, the JROC report was seen by many as a route to inject new energy and dynamism into the space. 

With the report’s publication on Monday, we’re now finally able to say with a reasonable degree of both certainty and granularity what the regulatory space is going to look like over the next two years. It’s a detailed document which you can read for yourself here, but if 50 pages is more detail than you need, here’s our summary.

1. Payments

This is probably where the report had the most good news for open banking technology players. Firstly, there was a huge statement of ambition in the report. It explicitly said, for the first time that we know of, that the ambition of JROC and the “Future Entity” (equivalent of the current OBL) was to enable Open Banking payments to act as a competitor to card payments. It also specifically calls out retail payments as part of that ambition. 

On a more down-to-earth level, the report backs up that ambition with concrete steps that will be taken – including, within the next few months, sorting out an accepted framework for the collection of fraud data so that banks and technology providers can align on how to tackle the problem. This is a crucial first step to broader adoption of OB payments.

As further “proof of the pudding” (vis a vis the ambition for payments) the report outlined that it would expect the future entity to support the creation of multilateral agreements around variable recurring payments (VRPs). This has been another stumbling block for participants as the industry works towards creating a jointly-viable commercial model. (We will be covering this in much more detail at our campfire discussion on Thursday 19th April at 4pm UK time. More information is available here)

This makes sense in the context of the report’s vision because it sees premium APIs (like VRPs) as a key way of delivering….

2. Ecosystem sustainability

There was less detail here. In general though the report sets out a vision of an ecosystem that is commercially sustainable for all parties both in terms of how the infrastructure is funded (more on that below) and on how innovation is incentivised. In the latter of these, the report bets big on premium APIs like VRPs and data APIs that were not part of the CMA order (a good example of this would be NatWest’s Customer Attribute Sharing API). 

There’s some wording in the report’s “Ecosystem” section around improved API performance and error message reporting. These will both be useful and will underpin the viability of premium APIs but the report stops short of sharing specifics which, when we’re talking about API availability and a subject as granular as error message reporting, is fairly crucial. Great that they’re being worked on but we can’t talk about the impact until we know the specifics. 

Where there is a deal more specificity however, is on the subject of…

3. The design of the future entity.

Firstly – addressing the elephant in the room – there’s no firm outcome on funding. Yet – though it’s in the works for the short – mid term. There is however a fairly detailed outline of the current thinking. 

At the high level, it wants to see a future entity with broader representation and a broader funding base. It’s current thinking envisages an entity with all ASPSPs (banks for the most part) as members funding a core set of activity. With other options open to the entity to generate funding from both inside and outside the UK system, either through “pay as you go” models or through other services like directories etc… (and even consulting with foreign governments). 

What has been ruled out is both the status quo and the opposite model using the FCA levy or a similar mechanic to derive funding from all participants through a single channel. 

The report sees this as too quick a fix, and something not conducive too….

4. The long term (regulatory) future

The report is clear that it believes Open Banking has a bright future in the UK and many of the 29 individual actions that it stipulates are designed to ensure that the structures around Open Banking are scalable and ready to deliver alongside Open Finance.

The report also goes on to explain the mechanism through which this last piece will be delivered. This will be through powers scheduled to be created as part of the Data Protection and Digital Information bill that is currently on its way through the houses of parliament. The bill delegates powers to create smart data schemes within key sectors to the relevant ministers of state. These powers include the ability to mandate participation from large players within the sector and it is explicitly called out in the report that Open Finance would be one of these smart data schemes.

It’s worth pointing out that the bill is only on its first reading at the moment and still has a way to go before it becomes law – keep your eyes on sections 62 – 65 as it goes through committee stage – assuming there are no major changes here then all should be as described. 

And that’s it.

50 pages, a 2 year roadmap and 29 individual actions – some people just got very busy! We said back in January that it was time for the industry to lace up its trainers and today, it feels very much like we just got a few more running mates.

Helen Child, Founder & CEO, Open Banking Excellence