2018/2019 Edition of the Global Regulatory Update

Global Regulatory Update  | Corporates Edition 7 1) Open Banking: Going global and intersection with other laws 2018 started with a significant development that presents opportunities for FinTechs, bank incumbents, consumers and for our clients: Open Banking in the UK went live in January 2018 and is re-shaping the financial services landscape. Over the next few paragraphs we explain Open Banking, how this was spearheaded in the UK, how it intersects with other laws in Europe, how it is being adopted around the world and what opportunities this presents for Citi. Open Banking is a UK driven initiative spearheaded by the Competition and Markets Authority (CMA). The CMA published a report following its Retail Banking Market Investigation which included a requirement for the UK’s nine largest banks to produce an open ‘Application Programming Interface’, or API’, in the UK as a way of securely sharing customer information so that companies can use this information to give more accurate personal financial guidance tailored to customer’s circumstances (and it is this requirement which intersects with the E.U.’s Payment Services Directive (PSD2). To fulfil this requirement, the nine banks are implementing Open Banking through the Open Banking Implementation Entity (OBIE). Whilst PSD2 does not require an open standard it does provide the legal framework with which the CMA’s mandate will need to be delivered. The open banking technology (using the above mentioned APIs for access to personal and SME current accounts) went live on 13 January 2018 (in line with the PSD2 transposition deadline) in a managed roll-out. For a six week period until the end of February 2018 the new technology will be tested by bank and third party provider staff in a live environment. The UK’s Open Banking regime has been expanded to further align with PSD2 by extending the scope to apply to all products caught by PSD2. Open Banking in the UK has set a trend which we have witnessed spread to other parts of the world. In Australia for example, it is being implemented on the back of a review which was published in December 2017 and can be found here, and the new Consumer Data Right, which will allow individuals to ‘own’ their data by granting them open access to their banking, energy, phone, and internet transactions, as well as the right to control who can have it and who can use it. The Consumer Data Right will be PART I: Issues affecting the banking industry and the broader market