Miles Cheetham explains how the UK’s Open Banking Implementation Entity is developing a common set of API standards for banks and fintechs to collaborate and create a range of new offerings
The Open Banking Implementation Entity (OBIE) was set up by the UK’s Competition and Markets Authority (CMA) in September 2016 to foster greater innovation and competition following its investigation into the supply of personal bank accounts and banking services to small and medium-sized enterprises.
A new direction
The investigation prompted the CMA to stipulate that the nine largest retail banks in the UK must fundamentally change the way they operate by offering customers the opportunity to securely make their personal data available to other parties, so that they can do more on their behalf.
It resulted in the creation of open banking as a secure way for customers to take control of their financial data using common application programming interfaces (APIs) and data standards that can be used by the developer and innovating community to make sharing financial information simple and safe.
This new technology is creating a more open and level playing field for fintechs and third-party providers (TPPs) to compete with the larger, more established retail banks and the wider financial industry, and it has considerable overlap with the Second Payment Services Directive (PSD2).
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