Updates on Open Banking Future Entity and framework in Mansion House speech

§ 01 Executive Snapshot

• What: Open Banking Limited (OBL) has been designated to lead the next phase of the Future Entity's development as outlined in the UK Chancellor's Mansion House speech.
• Who: Key players include Open Banking Limited (OBL), UK Chancellor Rachel Reeves, the Financial Conduct Authority (FCA), and KPMG.
• Why it matters: This initiative aims to establish a robust regulatory framework for Open Banking, crucial for enhancing payment services and digital finance in the UK.

§ 02 Key Developments

• Open Banking Limited has been tasked with convening and coordinating the establishment of the Future Entity, responsible for setting common Open Banking standards.
• The government plans to lay a statutory instrument under the Data (Use and Access) Act 2025 by the end of 2026 to support the new regulatory framework.
• An independent assessment into a future standards-setting body for Open Banking was conducted by KPMG, the results of which were published earlier this year.

§ 03 Strategic Context

• The Future Entity aims to ensure a coherent approach to Open Banking standards, evolving from the current framework established by Open Banking Limited.
• The transition to a Long-Term Regulatory Framework is part of the National Payments Vision (NPV) published in 2024, which outlines the government's ambitions for Open Banking's role in account-to-account payments.

§ 04 Strategic Implications

• The immediate consequence is the establishment of a standards-setting body that will enhance the regulatory clarity and support sustainable business models in Open Banking.
• Long-term implications include strengthening the UK's position in digital finance and fostering innovation in financial services through a more defined regulatory structure.

§ 05 Risks & Constraints

• Potential regulatory roadblocks could arise from the complexities involved in establishing a new standards-setting body.
• Competition from other financial technologies and the need for robust infrastructure could pose challenges to the successful implementation of the new framework.

§ 06 Watchlist / Forward Signals

• Key upcoming milestone includes the expected laying of a statutory instrument by the end of 2026 under the Data (Use and Access) Act 2025.
• Future developments will be monitored through the progress of the consultation process and engagement between OBL, HM Treasury, and the FCA.