CFIT to chair open finance taskforce announced by UK government

The UK government announced the formation of an industry-led Open Finance Taskforce, which will be chaired by the Center for Finance, Innovation, and Technology (CFIT). This announcement was made by Bim Afolami MP, the Economic Secretary to the Treasury, at the Innovate Finance Global Summit on April 15, 2024. The taskforce is aimed to unlock the full potential of open finance and improve access to credit by small and medium enterprises (SMEs). This initiative builds on the foundational work done by CFIT’s industry-wide coalition on Open Finance.

The Open Finance Taskforce will provide recommendations to the UK government on how financial data can be safely unlocked. It is tasked with identifying more use cases for open finance, data sets to be unlocked, and application programming interfaces (APIs) to be created to facilitate better availability of credit to SMEs. The Taskforce is expected to identify use cases and provide its recommendations to the government by June 2024. The Taskforce will be also required to identify “commercially viable approaches” that might incentivize businesses to share their data. One key workstream of the Taskforce will look at data and API prioritization while the other will look at potential commercial models. As per a CFIT press release, the taskforce has announced two trial initiatives:

• SME lenders, including Barclays, will design and implement open finance solutions that will accelerate SME credit assessment and loan decision-making. This initiative builds on the successful pilot analysis with HSBC and other CFIT partners, including IBM and CRIF, which demonstrated that accessing new datasets and auto-populating business loan applications can lead to a significant boost in lending decisions. Research estimates that a GBP 22 billion funding gap prevents SMEs from being able to invest, innovate, and improve their firms. This initiative is expected to help SMEs deal with such financing challenges.
• Citizens Advice (CA) and CFIT will begin industry-driven pilots in CA Stoke and North Tyneside with Experian. Aperidata and PayPoint have already completed CA pilots in CA SORT (Stockport, Oldham, Rochdale, Trafford). These pilots will help vulnerable consumers by allowing CA teams to quickly and safely access their financial data (with their consent) to advise on their financial needs. This initiative builds on the dashboard previously produced by CFIT and Citizens Advice. The dashboard showed that allowing CA clients to share their financial data could provide tailored financial advice to 40% more consumers facing financial difficulties and distress, supporting an additional 150,000 people annually.
   

CFIT was founded in February 2023 and, so far, the CFIT Open Finance Coalition has recommended, among others, the development of an open finance roadmap as part of a long-term regulatory framework and an implementation entity, in the form of Open Banking Limited, to deliver on this. The UK government is working to secure a foundational framework to accelerate open finance and develop a regulatory regime to oversee data sharing in financial services. The regulatory framework is part of the government’s plans to create a smart data scheme, with reference to the powers to be provided under the Data Protection and Digital Information (No. 2) Bill (the DPDI Bill), which is underway at the UK Parliament.