The UK Government has taken a significant step towards broadening the scope of open banking with the passage of the Data (Use and Access) Bill through the House of Parliament.
According to Finextra, this legislation sets the stage for the development of a wider open finance ecosystem, enabling consumers to share their financial data across a broader range of sectors beyond traditional banking.
The bill supports the transition from open banking, which has primarily focused on payments, to a more extensive open finance model. This shift will allow individuals to share their data across industries such as energy, telecoms, transport and retail, creating new opportunities for personalised financial services. Financial institutions, including insurers, investment platforms and pension providers, will be able to leverage shared data to offer consumers a more holistic view of their financial wellbeing. For example, insurance companies could access information on pension products, or banks could consolidate loans and deposit data from multiple institutions into a single application.
The UK Centre for Finance, Innovation and Technology (CFIT) has already demonstrated the potential of open finance by building two working prototypes. These include solutions designed to improve financial advice for vulnerable consumers and streamline credit assessments for SMEs applying for loans.
Further applications of open finance could see the integration of mortgage data to simplify property transactions or better access to utility deals, offering consumers improved pricing and greater financial control.
Open Banking Limited CEO Henk Van Hulle said, “This is a landmark moment for the sector, but it is just the beginning. Now is the time to turn these foundations into real-world outcomes which empower consumers, drive innovation, and unlock growth.”
He added, “Having set the legislative foundations for a smarter, more connected data economy, government, regulators and industry need to come together to make this a reality. The coming months will see important choices made that will frame the type of ecosystem and outcomes we deliver in the years to come.”
The passing of the bill signals a major development in the UK’s efforts to build a more connected data economy, with government, regulators and industry stakeholders expected to play crucial roles in shaping its future.
Source: https://fintech.global/
