Banks and fintechs debate what is needed to remove payments ‘gridlock’ in UK

Speakers from Lloyds Bank, ClearBank, Monzo, Innovate Finance, NatWest and CFIT discussed the need to “remove the gridlock” to progress payments modernisation in the UK, during a panel discussion at Open Banking Expo UK & Europe.

Panel moderator Kirsty Rutter, group strategic investment director at Lloyds Bank, set the scene: “The UK set the standard with the Open Banking model and that has been adopted, copied, pasted and built across the world in different forms suitable for different markets. The CMA Order gave us all a structure and a timeline, and it brought us all together.

“Since then, other countries with little to no infrastructure have taken on those principles. We’ve got the Indian UPI model, which is apparently now used by 28% of the population and now Peru, Namibia and Nepal are all adopting that same technology.

“In Brazil… Pix is used by 84% of the population and that account-to-account payments infrastructure is all based on the design premise of what we did in the UK.”

Rutter added: “In my view, it begs the question: Where are we going in the UK, and how are we going to unlock more of the value that we thought we were going to get that we’re not really seeing yet?”

Alexandra Rivas-Gale, vice president of product at ClearBank, told attendees that “it’s time for execution”.

“Let’s stop talking about it and let’s just move things forward. I think we are on the merry-go-round at the moment and key for us is, how do we lean in as an ecosystem, as banks, fintechs, partners, to really remove the gridlock?” she asked.

The panel debate, titled ‘Driving payments modernisation in an Open Banking era’, followed a Fireside Chat on the main stage between the Payment Systems Regulator’s managing director David Geale and Matthew Long, director, payments and digital assets at the Financial Conduct Authority.

JROC published its proposals for the design of the Future Entity that will replace Open Banking Limited (OBL), including a potential funding model, in April this year, at which point it also announced it was seeking views from across the ecosystem on its proposals.

During the session, ‘JROC recommendations on the vision and design of the UK Open Banking interim and future entity’ at Open Banking Expo UK & Europe, Long revealed that the response to the JROC consultation process is now expected in the first half of 2025.

Speaking on the payments modernisation panel alongside Rutter and Rivas-Gale, Charlotte Crosswell, chair of CFIT, said: “Open Banking was successful because there was a deadline and it was a very clear mandate.”

However, she questioned the need to wait for a mandate for payments, and pointed out that “we can’t wait for the end of Open Banking”. Instead, Crosswell suggested the ecosystem must drive progress at an industry pace to ensure that the UK is not left behind by other emerging technologies.

Crosswell also called on regulators and the ecosystem to “look at what payments could do for data and what data can do for payments”, noting that “at the moment we’re on dual tracks”.

But, Simon Burden, head of legal, competition law and regulatory strategy at NatWest, believes the key to “unlocking the market” is “to mandate participation by all the sending firms”.

He said that NatWest has a VRP product in the market, and is “keen for the PSR to push everyone over that line and to get involved”.

ClearBank’s Alexandra-Rivas Gale

The panellists also included Janine Hirt, chief executive officer of Innovate Finance, and Andy Sacre, head of payments at Monzo.

Sacre discussed the importance of putting the customer “in the driving seat”.

“They’re engaging with Open Banking products, but they’re not engaging with all the acronyms and the working groups that we get excited about day-to-day in this room,” he said.

“So, I think it’s [about] finding product market fit, building products that work for them, helping them solve their problems and their financial needs, rather than looking at just the regulatory framework, or just what the API spec will look like. Let’s put the customer back in the driving seat and let’s build some stuff for them.”

Another crucial point raised by panellists was the need for collaboration between fintechs, banks, and Big Tech companies to drive innovation and progress in Open Banking.

Innovate Finance’s Hirt said: “It is important that we create an environment here that is supportive and conducive to fintechs and startups that are harnessing that technology.

“Innovate Finance has released our FinTech Plan for Government, which identifies £328 billion that can be added to the UK economy in the next five years if our sector keeps being supported and if we deliver on three big ambitions.

“And one of those ambitions is about making the UK the world’s first Smart Data economy,” she added.

The debate also touched upon the importance of clear communication with customers, as well as the need for a unified approach to achieve market-wide success. Speakers emphasised the importance of defining “so what” – in other words, articulating the tangible benefits that Open Banking brings to consumers and businesses alike.

Further reading: Open Banking ecosystem reacts to UK government’s National Payments Vision