retail banks

UCD can be thought of as a new kind of ‘payment system’, in which an individual gets to control – from a single point of their choice – the flow of many kinds of trustworthy personal data, not just money but also proof of qualifications, official identity, student status, preferences, loyalty identifiers, authorizations, and many more.

Given this ambition, we expect that – in time – retail banks will become wallet providers, building the necessary functionality into their web-banking apps. The step can be seen as a continuation of the Open Banking (OB) reforms, providing advanced functionality and a business imperative (i.e. to continue to win custom from individuals as technology advances) whereas OB was merely a reluctant collective response to a directive from the Competition and Markets Authority (CMA).

The CMA, the Payment Systems Regulator, and the Financial Conduct Authority formed a Joint Regulatory Oversight Committee to study next steps for Open Banking reform. UCDx made a lengthy submission to submission to JROC’s Strategic Working Group (SWG)  in late 2022, arguing that user control of data (including identity) was necessary to give OB a business model, a brand, and a driver for change.

The final report from the SWG can be downloaded here. Identity is  dealt with in about three lines: it is clear that the UCD message has yet to penetrate, or that – if it has – consensus among the banks will not emerge without some external driver. For the first phase of OB, that driver was regulation, leading to the fine by CMA of the 9 largest banks. For the next phase, some similar external event will be needed, perhaps UCD