FCA recognises success of open banking
A top executive at the City regulator has said he sees open banking as a “growing success”.
Sheldon Mills (pictured), executive director of consumers and competition at the Financial Conduct Authority, said it was “quite phenomenal” that over five million people are now using the data sharing initiative.
“I see it as a growing success,” Mills told the Treasury select committee of MPs yesterday (21 February).
“Open banking now has over five million users and its quite phenomenal and it’s still growing.”
When asked about Starling Bank founder Anne Boden’s comments that “open banking has not been a success”, Mills said that he believes they were both talking about different things.
He said open banking has been successful in many ways, but she was right in saying it was not the reason why Starling Bank has been acquiring new customers.
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“She will be right in saying that the success hasn’t come from open banking, it would have come from their ability, particularly with younger generations, to attract a customer base,” Mills said. “Their business banking offering has been innovative as well, their ability to innovate and attract more customers.
“Where I might disagree with Anne is that what open banking has done is unlock a different set of responses to customer need that you wouldn’t have if you didn’t unlock the data sharing element. These include apps that allow you to think about where to put your savings or manage your money better.”
Mills underlined the important of maintaining the “successful mechanism” as we move into the next phase of open banking and said the business department is now looking at smart data.
“It’s important we expand the use of open data sharing into other forms of financial services as well, what’s commonly thought as open finance,” he added.
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Christina Segal-Knowles, executive director for financial markets infrastructure at Bank of England, was also part of the Treasury committee hearing. She said the central bank is working on Legal Entity Identifiers (LEIs), a global standard designed to uniquely identify an entity that engages in financial transactions.
These could be used to support an open data platform and improve payment services, with potential benefits for small- and medium-sized enterprises.
“The Bank of England has continued to work with the Treasury on a number of other initiatives to support better identification, better legal identifiers and digital identity for small businesses which will then facilitate their access to financial services,” said Segal-Knowles.
“It hasn’t fallen by the wayside, maybe it’s fallen out of the public’s view.”