DCMS blog

The National Data Strategy, Smart Data, and open banking

Imran Gulamhuseinwala OBE


Imran Gulamhuseinwala OBE

Implementation Trustee, Open Banking Implementation Entity

As part of us showcasing different aspects of the National Data Strategy we’re delighted to have a guest blog post from Imran Gulamhuseinwala OBE, Implementation Trustee, Open Banking Implementation Entity.

The National Data Strategy, Smart Data, and open banking

Smart Data was identified as a key policy initiative that can help achieve the first mission of the National Data Strategy: unlocking the value of data across the economy. By empowering consumers and businesses to utilise and share their data effectively, we believe we can help achieve this goal to the benefit of the economy as a whole.

Open banking is the live demonstration of the potential value of Smart Data, and we continue to work with the Smart Data team in the Department for Business, Energy & Industrial Strategy (BEIS) to aid policy development, sharing lessons we’ve learned as open banking evolved from concept to fully fledged ecosystem.

The benefits of Smart Data

The benefits of open banking are clear, but there is also scope to extend these benefits to other sectors such as wider financial services and industries such as telecoms and energy. This extension to further sectors is where the Smart Data team makes their name.

Our vision for the future of data is simple. It should work for the benefit of consumers and small businesses, encouraging competition and providing compelling alternatives, services and products to those offered by dominant incumbents. It should enable disruptive innovation in order to create new market opportunities and additional value.

Whilst these benefits come to the forefront of the policy, we would expect that enabling a successful delivery of Smart Data could also improve efficiency and productivity for the UK economy as a whole.

The UK took the first step on the world stage with open banking and has since become the leading model for its application. The recently published Kalifa Review concluded that if the UK is to retain its position as a global leader in financial services, it needs a comprehensive, coordinated and focussed strategy, and a delivery model to achieve this. The Government agrees, and whilst other countries are starting to make their move into the open banking space as well, we have made strong progress and already have more than three million consumers and small businesses who access a wide range of open banking enabled services each month.

Our thriving ecosystem of more than 300 regulated firms, who are collectively bringing innovative new products to market, serves as an exciting example of fintech incubation, development, and innovation. Our annual report serves to highlight the journey we have been on to make this happen, and that this progress is by design and not by accident. There are many reasons for this success, but one crucial aspect is that open banking was mandated, with a legal basis and powers set out in the Competition and Markets Authority (CMA) Order, Payment Services Directive 2, and General Data Protection Regulation. 

What’s next?

Whilst we can enjoy pole position in open banking, in order for the UK to realise the fullest potential of Smart Data, BEIS must consider the cross-sectoral implications of such technologies. Vital to this is having the right regulatory and legal regime in place, when Smart Data legislation is introduced. Otherwise, there is a risk of missing a key opportunity to build on the foundations of open banking and giving the wider Smart Data schemes a running start.

Of particular importance in the short term is the CMA consultation, published on 5 March, on the future governance arrangements for the Open Banking Implementation Entity. Serious thought needs to be given to issues of funding, governance, and the integration of open finance and Smart Data into future plans, as advocated for in Ron Kalifa’s recent Strategic Review of UK FinTech. The potential to expand the future entity will be crucial to the successful and efficient roll out of other Smart Data schemes like open finance.

In my consultation submission to the CMA, I outlined a proposed model for the future governance of open banking that satisfies the CMA’s four specified priorities, that the new service model is independently led and accountable, adequately resourced to perform the functions required, dedicated to serving the interests of consumers and SMEs and sustainable and adaptable to the future needs of the ecosystem.

As the implementation phase of open banking marks its final chapter, the UK must embrace the opportunity of Smart Data as set out in the Government’s National Data Strategy and Smart Data Review. In particular, the chance to position the UK as a global leader of data use and demonstrate a regulatory regime that supports responsible and transformative innovation.

Given all the work and investment that has pushed open banking to where it is now, it would certainly be a missed opportunity if all the learning and development is not utilised to deliver open finance and other Smart Data schemes. It is essential that we ensure collectively (and strategically) that what comes next allows us to move forward with momentum, to keep building, and crucially, to keep serving the public good.

Smart Data Working Group Report

This week BEIS published their Spring Smart Data Working Group Report which updates on the potential benefits and use cases of Smart Data, sets out proposals for cross sector coordination for Smart Data schemes, and lays out a roadmap for Smart Data going forward.  Stakeholder feedback is essential to great policy making and the report strongly encourages stakeholders to respond and provide further feedback. Please do get involved and send any feedback by 30 July 2021, responses can be sent via email to smartdata@beis.gov.uk or submitted via Citizen Space.

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