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HMG eyes £800 million new Open Banking framework

HMG makes a lot of payments: The Department for Work and Pensions alone makes 2.5 million+ daily that are worth £3.7 billion per week.

Photo by Kevin Grieve on Unsplash

The Cabinet Office, the UK’s corporate headquarters for government (HMG), is putting in place an Open Banking procurement framework that could be worth up to £800 million over the next eight years.

The so-called “Dynamic Purchasing System” (DPS) will provide a mechanism for both central government and the broader public sector to source Open Banking services including account information, digital payments and confirmation of payee (COP) services among others.

(HMG is a major payments user: The Department for Work and Pensions alone makes 2.5 million+ payments daily that are worth £3.7 billion per week. It recently modernised its payments infrastructure; refactoring payments applications to be event-based rather than batch-based, switching to microservices and greater use of NoSQL databases including MongoDB, with mainframe apps refactored to run on Linux servers.)

The new Open Banking framework is being put in place by Crown Commercial Services (CCS) and is the first of its kind CCS has developed – it expects to start supplier onboarding as early as this July 2023, with the  framework anticipated to go live for use later this Autumn.

Suppliers will have the opportunity to onboard throughout its duration. CCS expects to publish a full contract notice August 31, 2023.

Open Banking in the UK

There are now over seven million Open Banking users in the UK.

Open Banking, which requires banks to expose data and services via API where requested by customers, emerged in the wake of a Competition & Markets Authority’s (CMA) Retail Banking Market Investigation in 2016.

This concluded that established banks do not compete hard enough for customers’ business and that open banking should deliver a way for customers to “compare the deal they are getting from their bank.”

Earlier this year financial regulators set up two new working groups to deliver further Open Banking progress. Last week (June 6) the new Joint Regulatory Oversight Committee (JROC) set out a programme of work that details how to deliver the next phase of open banking in the UK.

Open Banking Limited, the entity set up to lead on UK Open Banking, has now been tasked with delivering across four key workstreams:

  • Levelling up availability and performance
  • Mitigating the risks of financial crime
  • Developing proposals for dispute processes
  • Improving information flows to third party providers and end users

Laying out their aspirations for Open Banking this spring, regulators said that "success will be measured through greater innovation, lower prices or costs and improved quality of services through competitive pressure being exerted across the sector... the increased use of and reliance on open banking by consumers and businesses, the significant increase of total number of active users, and overall growing investment..."

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