“The year of delivery on the next generation of open banking”: JROC sets out its recommendations for the future of open banking

The Joint Regulatory Oversight Committee (JROC) has laid out its plans for the future of open banking and open finance in the UK.

It also outlined its recommendations on the design of a future entity that Open Banking Limited (OBL, formerly the Open Banking Implementation Entity) will transition to alongside a new policy roadmap.

Formed of HM Treasury, the Competition and Markets Authority (CMA), the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR), JROC has outlined five key themes with delivery dates as soon as this quarter on some actions.

It established that the new roadmap will continue the development of open banking standards, and confirmed the development of a new long-term regulatory framework that will build on the PSR and replace the CMA Open Banking Order. 

“Let me be clear, because I know some folk have been worried, this will be the year of delivery on the next generation of open banking,” Economic Secretary to the Treasury Andrew Griffith MP said at the Innovate Finance Global Summit.

Griffith said that by Q3 this year there will be “tangible progress” across the board, saying that the plan is ”ambitious but achievable”.

The open banking roadmap consists of levelling up availability and performance; mitigating the risks of financial crime; ensuring effective consumer protection if something goes wrong; improving information flows to third party providers (TPPs) and end users; and promoting additional services, using non-sweeping variable recurring payments (VRP) as a pilot.

“We welcome JROC’s prioritisation of the roll-out of 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,” GoCardless co-founder and CEO Hiroki Takeuchi said.

“Above all, the report highlights the need for the Government, the regulatory authorities and industry participants to work together for JROC’s vision to be achieved. There isn’t a moment to lose and we’re excited to play our part.”

Griffith described this as a “key moment” for the open banking regulatory regime, saying the announcement today sets out a “sustainable regulatory framework”.

In just over five years, open banking in the UK has grown to seven million consumers and small businesses.

“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 forwards financial innovation,” Centre for Finance,Innovation and Technology chair Charlotte Crosswell OBE said.

“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.”

Croswell expressed her excitement at working with representatives on JROC and the wider open banking community.

“This will include identifying synergies with our upcoming work on open finance, and ensuring that we are all working towards the same goal of providing better financial outcomes and transparency for SMEs and consumers across the UK,” she continued.

OBL said in a statement that it welcomes the report, saying that it provides a “clear vision” for the future of open banking with next steps that will ensure its continued growth and success.

“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,” OBL chair and trustee Marion King said.

“Five years ago, the regulators, the banking industry, fintechs and other consumer and business groups collaborated to create an approach that is replicated by more than 80 international regulators. 

“This has reinforced the UK’s reputation as a global fintech centre. Now is the time to create a future entity and new regulatory framework that can build on open banking’s successes to deliver JROC’s priorities.”