Several banks in the UK have come under pressure to provide millions of pounds in interim funding for Open Banking Limited (OBL). OBL is the entity responsible for overseeing innovation in the Open Banking sector.

Regulators, including the Financial Conduct Authority (FCA) and the Treasury, assert that this additional funding is essential to combat financial crime and protect consumers in case of adverse events. A gathering convened by the FCA saw more than 40 financial institutions, including entities such as NatWest, HSBC, Lloyds, and Santander UK, discussing the necessity of a cash infusion into OBL. The requested amount totals GBP 10 million, with approximately one-third expected by 1 April 2024.

Participants, comprising traditional banks, digital banking entities, and payment providers, were given a short timeframe to evaluate the proposal, which aims to prolong OBL's lifespan until the enactment of legislation establishing a new supervisory entity for the sector. More information about Open Banking Introduced in 2018, Open Banking aimed to diversify the financial landscape by enabling individuals to share their financial data with fintech firms thus accessing improved deals on various financial products. However, it also brought forth concerns regarding data security and susceptibility to scams according to TheGuardian.

In a letter addressed to chief executives prior to the meeting, each firm was urged to contribute between GBP 70,000 to GBP 100,000, indicating an expectation of about 30 firms contributing to the fund. Regulators emphasised that the raised funds would improve supervisory efforts, mitigate fraud risks, and ensure effective consumer protection. They warned that a funding shortfall would impede the progress of Open Banking in the UK.

TheGuardian further revealed that larger banks expressed relief that smaller counterparts were also being called upon to contribute, as previously only nine lenders bore the entire financial burden of OBL. The FCA, commenting on the matter, described the meeting as positive and constructive, affirming their commitment to the future of Open Banking with further details to be unveiled in April. Open Banking payments in the UK In October 2023, data from Open Banking Limited revealed that the volume of Open Banking payments in the UK significantly increased in the first half of 2023.

According to OBL’s report, compared to the first half of 2022, the amount of Open Banking payments doubled in volume in the same period of 2023, reaching a record number of 9.7 million payments made in June. This represented an 88% increase, with further growth since the cut-off point of the report, as 10.8 million payments were registered in August 2023. .