Large banks, including NatWest, HSBC, Lloyds, and Santander UK, are facing pressure to provide interim funding amounting to millions of pounds for Open Banking Limited (OPL), the organization responsible for overseeing innovation in the open banking sector.
The Financial Conduct Authority (FCA) has summoned over 40 City firms to discuss the urgent need for a cash injection into OPL to prevent financial crime and protect consumers in case of potential issues.
Fundings Official (Credits: The Independent)
The Treasury and regulators are seeking a total of £10 million, with approximately a third of that amount requested by April 1, 2024.
The attendees of the meeting, which included high street lenders, digital banks, and payment providers, have been given just over a week to consider the proposals.
The injection of funds would extend the operational life of OPL while awaiting legislation to establish a new entity to supervise the sector.
Open banking, launched in 2018, aimed to disrupt the dominance of major UK lenders by allowing individuals to share their financial data with startups and fintech firms to access better deals on financial products. However, concerns over data breaches and scams have accompanied its implementation.
Fundings Official (Credits: Sky News)
In a letter addressed to chief executives ahead of the meeting, each firm was expected to contribute between £70,000 to £100,000, suggesting that approximately 30 firms are hoped to provide funding.
Regulators emphasized that the funds are essential to support the supervisor’s work, mitigate the risks of fraud and financial crime, and ensure effective consumer protection in case of unforeseen issues.
Highlighting the benefits of open banking and expressing excitement about its potential, regulators warned that a lack of funding would hinder the progress of open banking in the UK. They emphasized the importance of realizing the benefits of open banking as soon as possible for the benefit of all stakeholders.
