Open Finance: The FCA's Call For Input

The FCA has called for suggestions by 17 March 2020 as to how it can support more open access to customers’ financial data. A few thoughts here, with an article to follow in the coming weeks...

The major stumbling blocks, as ever, are genuine customer problems/demand and supplier appetite, which tend to be focused quite narrowly; and who gets access to the data and for what purpose. 

One suspects that the Nirvana of a single consumer 'dashboard for everything' remains a long way off. We’ve seen broad-based initiatives before, like the UK government’s ‘midata’ programme from 2011. Key challenges remain customer identity and authentication on a broad scale, as opposed to channels more closely aligned with specific customer activities. In July 2019 the Government Digital Service and the Department for Digital, Culture, Media & Sport were still calling for evidence of how the Government can support improvements in identity verification and the development (and secure use) of digital identities generally. 

Yet there have been genuine advances around more defined customer activities. The FCA itself cites the second payment services directive and related standards designed to open up the payments market, for instance. These were partly a response to strong demand for new, unregulated services that were already providing access to current account data and enabling the remote initiation of bank transfers. Those competing to provide these services were encountering a distinct lack of co-operation from the current account providers (mainly banks). Specific regulation was forthcoming and has duly helped account information and payment initiation services proliferate and scale. But regulation did not itself catalyse either the demand or the services themselves. 

At any rate, it will be interesting to see whether the FCA receives evidence of other existing but nascent 'open finance' type services whose growth is genuinely stymied by issues that can be resolved by regulation. Whether such use-cases are sufficiently distributed across the range of day-to-day activities in which customers are engaged to constitute generally 'open finance' will be interesting to discover but of secondary importance. 

Of course, the elephant in the room is who will have access to all the data and for what purpose. In this respect, it would be particularly interesting to know when the FCA and PRA will begin to actually audit the use of artificial intelligence by financial services providers, rather than merely survey the industry on a self-disclosure basis. If they're true to form, we'll see a few major train wrecks first...