Henk Van Hulle
CEO, Open Banking Limited (OBL)
The UK leads the way in developing a smart data economy, building on data-sharing principles pioneered by open banking, the first smart data scheme in existence.
Expanding this data sharing to other financial services, such as mortgages, savings and investments and other key sectors can deliver cost and efficiency savings for consumers and businesses, as well as unlock wider economic growth.
What is smart data?
Smart data is where customers consent to share some of their financial data with an authorised third-party provider such as an energy or telecoms company, in order to access products or services that are tailored to their individual needs, such as an affordable tariff. In financial services, smart data can empower consumers to make informed decisions about their savings by allowing them to see the value of their pension pots alongside their savings accounts, providing a clear view of all their assets.
Smart data also aims to make it easier for consumers and SMEs to switch providers, tackling the loyalty penalty — the difference between what loyal and new customers pay for the same service. The Department for Business and Trade estimates that this ‘switching inertia’ costs households around £1,114 a year on mortgages, mobile and broadband bills, keeping them locked into pricey contracts.
Providing consumers with easier access to their
data and the ability to share it with third parties
can also drive competition and innovation.
Providing consumers with easier access to their data and the ability to share it with third parties can also drive competition and innovation. The announcement of the Data (Use and Access) Bill last year signalled clear intent from the Government about the importance of building on open banking’s data-sharing principles to deliver a smart data economy that the Department for Science, Innovation and Technology estimates is worth £10 billion over the next 10 years while creating regulatory certainty in the form of a long-term regulatory framework for UK fintech startups to flourish.
Data portability
The secure movement and control of data will also support other innovative forms of technology. For example, as digital wallets grow in importance, their further integration with open banking would enable seamless and secure account-to-account payments and could allow digital verification services to be embedded to prove identity. In turn, these could create more streamlined and reliable systems, unlocking opportunities in fintech, payments, retail and government.
It’s crucial we continue to build on the early successes of open banking’s success and move at pace towards open finance and a smart data economy.
