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As part of our annual Payments Compliance Outlook report this year, which reveals the need for firms to find a balance between growth and compliance, we interviewed a selection of professionals in the industry for the inside scoop. 

Open banking and open finance continue to be exciting market developments that are affecting firms across all jurisdictions in our study. From the ambitious implementation timeline of UK regulators to the EU’s proposed open finance framework, this topic will likely continue to be a top payment trend in 2024. Here, we speak to Jack Wilson, head of public policy at , one of the UK’s leading open banking providers, to understand more. 

At the inception of open banking, there was a lot of emphasis on its use for sharing account data. How has open banking technology and uses of that technology changed in the last few years? 

The emphasis on account information has shifted, and there is now much more focus on the payments side of open banking. The perception was that payments took off slowly — but it takes time to educate businesses about new payment methods, and for those businesses to put a change into their own roadmaps. The open banking industry has been working hard on this, and that is now paying off, with more than 11m open banking payments made in July 2023. With variable recurring payments just starting to take off, we are unlocking yet more convenience for consumers, allowing them to save money and pay off debt with ease. 

������ϲʿ�����¼ has recently seen an uptick in regulatory activity for open banking in the UK. What are your thoughts on future open banking regulatory developments? 

There is a heck of a lot on the horizon. 2023 was supposed to be the year of delivery for open banking. So far, there has been a lot of discussion and consultation. 

The Joint Regulatory Oversight Committee (JROC) has been continuing its work over the summer, and due from that is a roadmap (due autumn) for unlocking new open banking functionality and enabling recurring payments to be used for bill payments, e.g. tax, utilities and other financial services applications, such as investments. 

The JROC is also looking at the future of the Open Banking Implementation Entity (OBIE). OBIE has really been responsible for making open banking a success in the UK. Its future has been uncertain for a few years, but hopefully the JROC will create certainty, e.g., through its funding and governance, and it can get on with delivering the rest of open banking.

The Data Protection and Digital Information (DPDI) Bill is going through parliament as we speak and should give “Smart Data” powers to sectoral departments. While it will give the Treasury powers to “underpin” the future of open banking, it will also enable other departments to embrace open data.  

What effect do you think emerging technologies, including AI, will have on UK regulation? 

Financial regulators are increasingly engaged in emerging technologies. In recent years the focus has been on understanding the risks of crypto and stablecoins and developing an appropriate regulatory regime. It is likely we will now see regulatory activity in the AI space, even if this is initially just sizing up the opportunities for financial services. We should expect that AI will feature in forthcoming regulatory strategies and business plans.

How will the Consumer Duty impact firms like TrueLayer and what does it say about the future of UK regulation?

The Consumer Duty applies to all open banking firms and we have been busy preparing for the go-live date over the summer. Open banking's success hinges on gaining the trust and loyalty of consumers, creating excellent consumer experiences and adding value — so the Consumer Duty obligations should not come as a heavy lift for the industry. 

The duty shows that the UK is way ahead when thinking about that kind of regulation, but it does demonstrate a swing of the pendulum from a focus on competition (as we had in 2016 with open banking legislation) to a focus on consumer protection (when taken alongside the wide-ranging APP rules).

What regulatory themes do you think will dominate 2024?

Early in 2023, Andrew Griffith, the UK economic secretary, said that this will be the year of delivery for open banking. We have seen a lot of work and discussion taking place about the future approach to regulation. However, I do not think that the rubber has hit the road yet. We have not unlocked new functionalities.

"I'm hoping that 2024 is the actual year of delivery and that we see both banks and third-party providers come together to create more new products and services for consumers and businesses."

Have you noticed much divergence between the EU and the UK on regulation thus far? How does this impact firms like TrueLayer?

There is a divergence with timelines. The EU machinery has started to roll on reviewing PSD2 and creating a revised directive and regulation. A lot of work has been put into this and the ball is now rolling. In the UK, they have not yet kicked off that major review of the legislation, and we do not have a revised text. We have had a consultation and have made piecemeal changes like those for APP fraud and bank account closures, but there have been no huge developments yet. I think we are at risk of falling behind.

Likewise, in the UK, there has been a lot of discussion about open finance. The UK kicked off very early in 2018-19 with this, but then activity dropped off. In the EU, we have now got the FIDA proposal. We do have an opportunity to catch up with the Data Protection and Digital Innovation Bill, but the powers in that bill need to be put to use quickly by the relevant regulators once final.

While there may be a divergence in timelines, I think that the EU and UK have the same things in mind. It is an interesting time to be in both markets!    

Want to know more? Join the webinar!

Continue the conversation live with Jack Wilson on Tuesday 30th January, at 2pm GMT, in our webinar, The Compliance Dilemma: Growth at What Cost? He’ll join our Senior Journalist, Jimmie Franklin, and other experts to dive deep into what open banking looks like in 2024, and more.

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In the meantime, get your copy of the Payments Compliance Outlook 2024, and start unlocking the trends, challenges, and solutions for compliance teams in 2024.