By: 13 February 2024

Helen Child, founder and chief executive officer of Open Banking Excellence

Smart data: Building a post-Brexit success story for Britain

The UK is at an important crossroads. Almost six years ago, open banking launched in the UK. This headstart enabled Britain to become an undoubted global leader. Now we have the opportunity to secure that lead or watch as other countries race ahead in an exciting new sector: smart data.  

This emerging industry is strongly linked to open banking, which enables consumers to share their data securely to access innovative and inclusive new types of financial services. Open banking has already created around 4,800 jobs in the UK and the sector is now worth more than £4bn. Globally, it is expected to generate more than $416 billion in new revenues 

We’re only at the very start of the story. The next stage of the journey is open finance, in which data from a wider range of financial services is made available to be shared securely. Then we will see the dawn of an open data economy. A vast range of industries from utilities to healthcare will join the data-sharing ecosystem to deliver new types of products and services for consumers and businesses built on democratised data.  

Open banking has already created around 4,800 jobs in the UK and the sector is now worth more than £4bn.

The UK has a chance to lead this growing industry, which relies on the technological and regulatory innovations pioneered during the creation of open banking. If government and industry make the right decisions, the already impressive growth of open banking will help the UK to secure a place at the centre of the smart data “Big Bang”, as described by the chancellor in the most recent autumn statement. 

There is a clear chance to emerge from the Brexit era to become a global hub of knowledge, learning and innovation. Westminster has realised the potential. Now, the question is whether regulators, politicians and industry can unlock it.  

Why is the UK an open banking leader? 

The success of the nation’s open banking ecosystem relies on forward-thinking rules, regulations and standards which enable the sharing of bank account data on a consent-driven basis. The work which took place in the UK provided a blueprint for other jurisdictions to follow.  

Our lead is at risk of evaporating because other countries are moving quicker. Australia has already expanded from open banking into open energy, with the consumer data right giving consumers the ability to share their energy data with third parties to switch providers or access better deals. Brazil moved from open banking to open finance in just two years and has now introduced open insurance. Competitors are racing ahead and we must increase our speed to maintain global leadership.  

We have the talent and access to funding in place to sustain our momentum. There is also a commitment from politicians and regulators, with the Joint Regulatory Committee working with the industry to finalise innovations such as “variable recurring payments”, which let consumers and businesses initiate regular payments of varying amounts from their bank accounts.  

In 2024, the data protection and digital information bill will fire the starting gun for open finance by mandating open banking-style data-sharing in a range of sectors including energy, telecoms, pensions, mortgages and insurance.  

These developments are positive, yet do not fully address the challenge ahead. Nor will they fully unlock the many opportunities on the horizon. To lead the world, we must go further and faster.   

Creating a pathfinder for Britain 

To seize the opportunity ahead of us, the UK should start by establishing an agile pathfinder—an open banking export hub and centre of excellence that can help emerging markets establish their own ecosystems. This will leverage UK expertise and support the government’s trade mission strategy and programme, as well as identify potential areas of growth. The pathfinder should adopt a strategic approach to drive collaboration between industry and government to generate new trade, drive financial services sector growth, create highly skilled jobs and underpin trade mission programmes.  

In the short term, there is a significant export-led growth opportunity for players in the UK open banking ecosystem. We have been monitoring 30 markets around the world and estimate that the potential market for UK firms will be worth £1.76bn over the next five years.  

There is demand for British open banking pioneers, who have the proven ability to perform a wide range of roles in emerging ecosystems, such as writing the technical standards which govern the exchange of data between participants in the ecosystem. Firms in the UK can also offer API development services, deliver regulatory sandboxes which are testing environments for open banking services or build directories which record which firms are regulator-approved to engage in data sharing. Longer-term opportunities include the creation of global standards which enable data to flow across borders and address the challenge of interoperability between ecosystems.  

We have been monitoring 30 markets around the world and estimate that the potential market for UK firms will be worth £1.76bn over the next five years.  

UK technology companies have had ample time to develop the necessary technology, procedures, and expertise to handle transaction data on a large scale, ensure the safe management of customer data, and integrate with established financial institutions. In this field, no other nation rivals the expertise of UK firms. 

The scale of this opportunity is immense, and British businesses are uniquely positioned to shape and lead an industry that has boundless potential. Immediate action is necessary. We need to lace up our trainers and do the work needed to ensure the UK secures its place at the vanguard of the global open data movement. 

Image: Open Banking Excellence / Canva