Open Banking Implementation Entity

 

In 2016 The Competition and Markets Authority (CMA) researched the state of the United Kingdom's (UK's) financial market. After the data has been assessed CMA published a report which concluded that legacy banks in the UK don't have to try hard to gain new customers whereas new entrants found it troublesome to grow and access the market. Therefore, CMA recommended the execution of Open Banking Implementation Entity (OBIE).

Right there the shift in the banking ecosystem was ignited. Since 2018 the improved landscape of the banking market has allowed consumers and Small and Medium-Sized Enterprises (SMEs) to dispense their financial information to Third Party Providers (TPPs). Open banking created a secure way for payment data sharing which encouraged TPPs to offer tailored digital services to their clients.

Because open banking seems to reach higher levels of implementation within the financial market the Open Banking Implementation Entity has also grown and expanded its scope to include a service provider role. Consequently, now OBIE’s pursuit can be put into three ranges - the development of an open banking landscape, supervision and, implementation of crucial services and infrastructure.

 

Open Banking Implementation Entity (OBIE)

The purpose of Open Banking Implementation Entity (OBIE) appearance is to produce and execute open banking in the UK. It was set up as Open Banking Ltd by CMA. OBIE cooperated with CMA9 (Nine largest banks in the UK, based on their account volumes: Lloyds, Barclays, Nationwide, RBS, Santander, Danske Bank, HSBC, Allied Irish Banks and Bank of Ireland.) and other contributors to generate standards and definitions for the Application Programming Interface (API), security and other components of the open banking landscape. OBIE also accelerated interaction between TPPs and the CMA9.

In March 2021, the CMA originated its open banking implementation guide on the forthcoming jurisdiction of open banking. In this process, Open Banking Implementation Entity (OBIE) was at the centre of focus. After consultations with contributors, on May 17 2021, CMA launched an update emphasising the answers from consultations with contributors. The anticipated tactical regulation should also be published shortly.

UK Finance is a financial industry body that creates a collective voice for it. It represents 300 companies within the market and acts to improve competition, innovation and support consumers. UK Finance strives to be a part of a transparent and innovative banking and finance industry. Therefore, it conducted research on the prospects of open banking over the past twelve months at the CMA’s request. Not long ago UK Finance published its guidelines where it described the possible OBIE’s transition into a service company to accommodate the Open Finance ecosystem.

While the progression of the OBIE’s role is crucial, there are concerning factors discussed in the financial industry that should be answered before proceeding any further. The main aspects that are contentious are the state of open banking development, the source of funding for open banking and the supervision body. The Open Banking Implementation Entity (OBIE) head of policy, Alan Ainsworth stated that “open banking is at an inflexion point which, if not approached with the utmost caution, presents the risk of undoing four years’ hard work in the establishment and growth of the sector.”.

OBIE in its existence years has achieved an essential foundation and completed the open banking implementation guide. It has acquired more than 3 million consumers and SMEs together with several hundreds of TPPs. The results obtained by Open Banking Implementation Entity are remarkable and have the rest of the world striving to duplicate the United Kingdom’s system. However, there are still some discontinuities in the proposals and they should be resolved in the future.

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