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U.K. Bank Data-Sharing Standards to Take Effect in 2018

U.K. regulators have laid out a timeline for implementation of new open banking standards that proponents say will enable banking data to be shared securely to give consumers access to tailored financial services and increased choice.

The U.K. Competition and Markets Authority (CMA) in early February issued a final order outlining when the recommendations and standards it established last year are to take effect. Under the CMA order, the U.K. nine largest banks have until Jan. 13, 2018, to put into place an open API interface for customer data sharing. The banks—including RBS, Lloyds, Barclays and HSBC, among others—also were ordered to establish an entity to guide implementation of the new data-sharing standards by the middle of February.

The open banking standards have been in the works for more than a year. In the fall of 2015, a working group of U.K. banking, data and fintech professionals was tasked with exploring how the sharing of financial data could be used to help consumers transact, save, borrow, lend and invest. The group in early 2016 issued a report calling for an open banking standard that would enable consumers to opt to share transaction data from their current accounts with other banks and third parties. Data sharing would aid consumers by giving rise to new products and services, such as comparison tools, designed to suit their individual needs, according to the group. For example, a consumer could give an approved comparison service permission to access his bank account data. The service could then access that information via open API and recommend an overdraft facility. The open standard also would enable consumers to manage accounts with multiple providers through a single app. In August 2016, the CMA—the U.K.’s primary competition and consumer authority—included the working group’s recommendations on open data in its larger package of reforms aimed at increasing competition in the U.K. banking sector.

The U.K open data standards echo the EU-wide data-sharing framework due to be implemented as part of the Second Payment Services Directive (PSD2), set to take effect in all EU member states by Jan. 13, 2018—the same date as the U.K.-specific standards. The CMA said that the two sets of standards will largely overlap and recommended that the U.K. standards be implemented “in such a way that it will assist the full range of payment accounts and payment services providers covered by PSD2 to comply with those obligations.”

Both the U.K. and EU data-sharing plans have come under fire from some in the fintech community, who have criticized both plans as favoring established banks over new entrants—thereby undermining the plans’ stated intents of increasing market competition. For instance, some fintech providers worry banks will be given too much control over the channel by which startup competitors will be able to access their consumer data, such as potentially limiting the number of inquiries a fintech company can make each day to a bank to obtain account information.

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