The Current Account: The Latest Headlines From Across The Banking Sector - January

Welcome to The Current Account! We hope you enjoy our latest round-up of the top news from the industry in January.

Headlines from the banking sector this month

In this edition of The Current Account, we look at open banking as it hits a significant milestone and the fast-approaching Consumer Duty deadline…

Open Banking celebrates its 5th anniversary

• Earlier this month, the CMA announced the completion of the open banking roadmap with Barclays, HSBC, Lloyds, Nationwide, NatWest, and Santander having now completed their implementation.
  
• Since the launch of Open Banking, there has been strong cumulative growth in usage, with current statistics showing that there are 6 million regular users in the UK. Ecospend, an Open Banking payment provider recently reported that £123 million in self-assessment open banking-powered payments were made via the HM Revenue & Customs app.
• UK’s Open Banking Implementation Entity (OBIE) recently appointed Marion King as its new chair and trustee. Her priorities as chair will be to maintain the existing implementation of Open Banking, along with working with the Joint Regulatory Oversight Committee (JROC) to decide the future state of open banking in the UK.

PEN Point Of View:

We expect to see an increase in the application of Open Banking as consumers and businesses make use of financial tools to cope with the cost-of-living crisis. With the potential launch of a digital pound in the future, we expect the government and central bodies to raise awareness of Open Banking, as it will be a key facilitator of a long-term shakeup. The technology that Open Banking has introduced will allow for a more seamless and secure flow of information and transactions between different financial institutions and digital platforms. This is likely to help the digital pound if introduced, to be more widely accepted and used by consumers and businesses.

The Consumer Duty deadline is fast approaching

• Consumer Duty represents a fundamental shift in the FCA's approach to regulation. Last year's prediction that this would deliver the "biggest regulatory overhaul in a decade", is already coming to fruition, months before the July 2023 deadline.
• The FCA have proactively reviewed firms' implementation plans and found that some firms have plans with the level of detail and types of activity that suggest they understand the "step change" that the Duty dictates. 
• Others, "are falling behind in their preparation" and are "over-confident" that they are already meeting the duty and can repackage existing data, policies, and processes in a way that will adhere to requirements.
• One key area of concern for the FCA is the deliverability of plans. They found that some firms are still completing their gap analysis and have plans with tasks and project requirements yet to be fully scoped.
• Consumer Duty cannot be treated as a "tick-box" exercise. For example, when it comes to creating and embedding a customer-centric culture in an organisation, the FCA have reiterated that this “can’t be achieved simply by making adjustments in governance, MI and processes”.

PEN Point Of View:

These regulations cannot be treated like those before. The FCA are taking a data-driven approach to these regulations and if firms do not have the data to back up their Consumer Duty reporting / attestations, the FCA will make an example of firms as they did when TCF was first introduced. We urge firms to really get under the surface of collateral, procedures and processes in a meaningful and considered way. We also reinforce the FCA’s point around building a customer-centric culture. In our experience firms forget that to truly drive cultural change the practical activities (e.g. creating strategic objectives) must be paired with behavioural ones (e.g. empowering employees to do right by the customer).

And in case you missed it…

• UK bank branch closures accelerate. Barclays are introducing semi-permanent banking pods in high-footfall areas, and we will see more shared banking hubs across the UK.
• New data shows that major banks are struggling to manage their digital records, with around 10% of their customer records being duplicated.
• The UK is set to become a global leader in the fight against greenwashing.
• A variant of point-of-sale Malware, known as Prilex, can now block contactless payments and force victims to use physical cards before criminals steal from them.

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