The Open Banking Implementation Entity (OBIE) has recommended an improvement to the payments capabilities and refund functionality.
This call has come following the launch of its new report “Open Banking: Preparing for Lift Off”, which it had commissioned from regulatory advice platform Fingleton. Its report reviews the progress made in open banking, the potential for it to become a cornerstone of the digital economy and recommendations to improve the regulation.
The document acknowledges the foundations on which open banking was built and the UK’s ‘global leadership position’. Additionally, the report has acknowledged that open banking has kick-started an ecosystem of digital innovation even before it has been fully implemented.
As part of the report, the OBIE made several recommendations on how to improve the regulation. Suggestions included the improvement of payments capabilities, and refund functionality, the development of premium APIs, and improving consent protections for consumers.
Trustee of the Open Banking Implementation Entity (OBIE), Imran Gulamhuseinwala OBE said, “This report clearly demonstrates how far the Open Banking initiative has progressed, and the potential that exists to help create a banking market that better serves consumers and small businesses. Nonetheless, PSD2 is not a complete solution and we need to further develop the Standards if Open Banking is to fully meet its objectives.
“As the report points out, there is a pressing need to address refunds, Premium APIs and Open Finance. In time, Open Banking has the potential to become a cornerstone of the digital economy by contributing to other sectors and components of digital identity.”
PSD2’s final deadline is September 14 and players in the market have been frantically trying to get their systems ready. However, a report from open banking API developer Tink claims that none of the banking APIs have met the quality requirements for the regulation.
According to the RegTech startup, it has attempted to integrate with 84 APIs which span 2,500 banks and 12 European markets, but none of them meet necessary conditions for integrating.
Fingleton CEO John Fingleton said, “Open Banking is the first attempt by competition authorities to use technology to rebalance complex markets towards consumers. While great progress has been made so far, more is needed to guarantee that it takes off with consumers and business users.
“This matters for more than just banking: making a success of it here gives us a model for similar steps in other markets where customer inactivity or loyalty can leave people worse off.
“There are two ways to tackle the so-called “loyalty penalty” – price controls and regulation that damages competition, or reforms that open markets up to competition and make it easy for customers across the market to access and act on the best deals for them. The Open Banking model applied to energy, telecoms, mortgages and insurance could eliminate the “loyalty penalty” in these markets while driving more competition and innovation for consumers, not less.”
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