This presentation by the UK Competition & Markets Authority was made during a workshop on “Regulation and competition in light of digitalisation” held by the OECD in Paris on 31 January 2018. More papers and presentations on the topic can be found out at oe.cd/wrcd.

1. 1
Workshop on Regulation and Competition
in light of Digitalisation, 31 January 2018
The CMA’s Open Banking Remedies
Bill Roberts

2. UK Market Investigation Regime
2
● Enterprise Act 2002
● Whether any feature or combination of features, of each relevant
market, prevents, restricts or distorts competition and thereby has
an adverse effect on competition (AEC)
● What actions should be taken to as comprehensively as possible
remedy, mitigate or prevent the adverse effect on competition or
any detrimental effect on customers
● Retail banking market investigation :
- Personal current accounts
- SME banking: business current accounts and SME lending
The CMA is able to investigate markets where there may be competition
concerns. In 2016 it launched an investigation into the retail banking market.

3. Market investigation findings
● Adverse effect on competition
in the provision of
- PCAs
- BCAs
- SME lending
● AECs linked
- Products
- Geographic market
3
● Features:
- Barriers to accessing and
assessing information
- Barriers to switching
- Low levels of customer
engagement
- Incumbency advantages
- Product linkages
- Information asymmetries
CMA’s investigation into retail banking found large and stable market share of 4
major banks, very low current account switching rates, high overdraft charges
little shopping around for loans by SMEs. Concluded that banks didn’t have to
work hard enough to keep their customers.

4. Our remedies package
4
Foundation measures
Open Banking standards
Service quality information
Customer prompts
Current account switching measures
PCA overdraft
measures
Additional banking measures for small
businesses
Better governance of guaranteed
switching service
Extended redirection of payments
following switching
Customer access to transactions history
Customer awareness and confidence
Overdraft alerts with grace periods
Monthly maximum charge (MMC)
Improved account opening and switching process
Competition to develop SME comparison
tools
Loan rate transparency
Loan price and eligibility indicator
Standard information requirements for BCA
opening
Sharing of SME information
‘Soft’ searches
Role of professional advisers
Package of measures included ‘conventional’ remedies e.g. information on better
value accounts and loans, prompts to switching, a frictionless switching journey.
Did not, as some had urged, create more banks by breaking up the incumbents.
But did aim to facilitate the entry of competitors using new technology.

5. 5
Facilitating entry by banking service
providers employing new technology
In this case the adoption of common, open-standard application programming
interfaces (APIs), data and security standards.

6. Open APIs - features
APIs allow applications to share data and functionality bringing benefits to
consumers and SMEs. Common and open standards for APIs enable (smaller)
developers to create products more easily and efficiently. 6

7. Customer visits
comparison site.
Bank checks
PCW and
sends data
securely to it
PCW uses
transaction data to
calculate which
product is best for
that customer,
including rewards
and charges
Customer
clicks through
to online bank
account and
enters
credentials.
Tells bank to
send
transaction
details to
PCW
1
2
3
4
Benefits of Open Banking 1
Customer
switches
account
5
Secure sharing of data with trusted partners enables consumers and SMEs to find the
best products for them. The use of APIs means customers do not have to disclose their
online credentials to TPPs (as they do with screen scraping). 7

8. Benefits of Open Banking 2
• The current account is a bundle of services: cash storage, payment, short term
credit. New providers will be able to unbundle the more profitable of these, for
example overdrafts.
• Personal and (SME) business financial management tools will integrate with
current and other accounts, providing ‘a single lens’ and new tools.
“FinTech’s true promise springs from
its potential to unbundle banking into
its core functions of: settling
payments, performing maturity
transformation, sharing risk and
allocating capital. This possibility is
being driven by new entrants –
payment service providers,
aggregators and robo advisors, peer-
to-peer lenders, and innovative
trading platforms. And it is being
influenced by incumbents who are
adopting new technologies in an
effort to reinforce the economies of
scale and scope of their business
models.”
Mark Carney, Governor of the
Bank of England, 25th January
2017
8

9. 9
An example of unbundling
This product will monitor your current account balance and, if needed to avoid
overdraft charges, will pay in money from either your deposit account or a line of
credit guaranteed to be cheaper than your bank’s. Similar products can transfer
excess cash into an interest paying account.

10. 10
Tools to help ‘squeezed’ and
‘struggling’ consumers
• Organisations involved in debt counselling have been quick to spot the
opportunity that Open Banking provides to create new digital tools to improve
consumers’ financial capability
• Consumers with ‘thin’ credit files will be able to demonstrate their
creditworthiness by sharing their transaction data with lenders

11. (a) set up and pay for an entity (the Implementation Entity), tasked with agreeing, implementing and
maintaining open and common open banking standards;
(b) appoint a suitably qualified, independent person (the Implementation Trustee), to act as chair of
the Implementation Entity with responsibility for the delivery of the project’s objectives;
(c) use their best endeavours to achieve the objectives of the project within the timetable agreed with
the CMA;
(d) agree to be bound by the decisions of the Implementation Trustee in the absence of consensus;
The CMA required the leading banks in GB
and NI to
Implementing Open Banking
The CMA had to strike a balance between creating an implementation vehicle with
narrow representation, to maximise speed of decision-making, with one which was
more broadly based but less agile. We designed the Implementation Entity on which
FinTechs, Challenger Banks, PSPs and consumers are represented through
Stakeholder Groups.
11

12. 12
The Implementation Entity (Open Banking):
• agile, able to move fast in order to complete its task within the deadline set
• inclusive of the sector’s stakeholders eg FinTechs and challenger banks
• focused on the features of the market that we concluded give rise to the AECs
• mindful of the requirements of PSD2
• adequately resourced (c100 staff), funded by the 9 providers
• Chaired by the Implementation Trustee
The Implementation Entity

13. The Implementation Trustee:
• pivotal position: responsible for the delivery of open banking standards within
an ambitious timeframe
• has the resources and powers necessary to do the job, including the ability to
impose a decision where consensus cannot be achieved
13
The Implementation Trustee
Imran Gulamhuseinwala
Implementation timetable includes two major deliverables

14. 14
The first phase of the implementation, product and reference data release
through open APIs, delivered end March 2017). Data standards and API
specifications available to developers on the Open Banking website.
Implementation Timetable - 1

15. 15
Implementation Timetable - 2
Phase 2 (transaction data and read/write functionality) rollout began13 January
2018 (to coincide with PSD2).Go-live to customers in March

16. 16
Consumer adoption unlikely to be rapid
Likely to follow a “J” curve. Early adopters will probably be younger (“digital
natives,” “Generation Z”). Adoption will be dependent on compelling customer
propositions as well as trust in data security.
Driverless cars

17. 17
The key challenge - trust
Customers are, naturally, concerned about the risks of sharing their data
though levels of understanding of open banking and the safeguards built into it
are low. Confidence will grow with experience and the entry of trusted brands
into the banking services market.