This article was written by Paloma Kubiak for Your Money Magazine
John Penrose MP says there’s no reason why open banking can’t be replicated in online retailing, energy and health. Plus when it comes to consumer redress, it could make the relevant ombudsman service quicker and cheaper.
In a keynote speech at the annual flagship conference of The Investing and Saving Alliance (TISA) 2023, Conservative MP, John Penrose revealed he had been asking a series of questions during a debate on the ‘data bill’ – the Data Protection and Digital Information Bill – over several clauses relating to smart data.
He explains that embedded in the middle of this bill – which covers digital ID and ensuring data is safe – are several clauses on smart data which “really matter” and present “an enormous opportunity” for the economy.
The debate comes just a month after the Government’s Autumn Statement where it confirmed it will “kickstart a smart data big bang, setting out the UK’s ambition for using new powers in the Data Protection and Digital Information Bill, exploring innovative opportunities across seven sectors: energy, banking, finance, retail, transport, homebuying and telecoms”.
Penrose said: “We have a world-leading position in banking; why can’t we turn that into an open worldly position in open energy, in open online retailing, open health, in open almost anything?
“Those seven or eight clauses embedded in the middle of the data bill say to Government and to regulators, ‘we are going to start trying to replicate what’s happened over here in open banking, and we’re going to try and do that in all these other sectors too’.”
A roadmap for the data bill
However, what the bill didn’t have and which “every business person wants”, is a timetable or action plan of what’s to come and when.
“If you’re running a FinTech operation and one of your products is a piece of middleware which is incredibly successful in open banking, and you rather fancy the notion of running your particular piece of the technology stack across lots of other sectors too, the first thing you’re going to need is a list of which sectors and by when,” he says.
The Weston-Super-Mare MP, added: “[This is] because you’re going to need to be able to go into your development team and say, ‘okay guys, it’s going to be health in six months’ time, and then it’s going to be energy four months after that, and therefore we’ve got deadlines we’ve got to hit, we’ve got to be market ready, we’ve got to be ready to roll this thing out.
“And therefore, here’s the development pathway that we’ve got to follow. Until you got that, you got nothing, you don’t know what to do, you don’t know what order to do it in and you could very well be wasting vast amounts of time and money and resources trying to be ready for health, when in fact it’s going to be energy first.”
As such, he pushed ministers for a date for an “investable timetable” and was told January was the target period.
Penrose added: “If we can get that step, that timetable, then many people will be able to work out what that’s going to mean for their business and what the opportunities are and how to realise them effectively.”
Benefits for consumer redress
Away from the business side of smart data and open banking, Penrose said for consumers, “they won’t want to know about all the really exciting nerdy detail of why something works better, they certainly don’t want to know what’s going on inside the engine of a car.
“What they do want to know is ‘will my life be more convenient or safer or more fraud proof or cheaper if I use this app rather than that one?’ That’s why it will help if I’m time or cash poor and providing it works, it’s safe, then I don’t really care how.”
He adds that the identified sectors have a good existing network of ombudsman with consumer redress schemes already and so these will need to be “ready and able to work in a smart data environment too”.
Penrose said: “I’m hoping, I’m expecting actually that it [smart data] ought to make the job of a consumer redress ombudsman service quicker and cheaper to do potentially and it also ought in many cases to reduce the inherent risk with some of the design outs of risk of fraud, with many of the pre-smart data systems and processes have built into them and so therefore the need for some of these services should go down in some areas at least.
“The disruption that smart data is going to cause will not just be confined to the companies and organisations; it will spread to every single corner of each of the affected sectors and we’re all going to have to roll with it, but again, it only works if consumers can see their lives are better.
“If we’re asking them to bear with us because it makes us more profitable, then we’ll get very short shrift and they won’t see why the heck they need to bother. If we put them first [consumers] then we’ll be alright,” Penrose says.
Inter-operable data standards
Meanwhile, the other missing part of the data bill is navigating inter-operable data standards.
Penrose explains that all this data exists in “data lakes” which are going to be freed up in say energy, telecoms, health etc and as they’re held by different people in different formats for different purposes and under varying legal and regulatory environments, clarity is needed on how they’ll intertwine.
“There’s no point in trying to create the smart data equivalent of open banking in energy, for example, if the data standards that you create in energy won’t talk to the data standards you already have in open banking, otherwise there’s no leverage for anybody.
“Somebody who’s got that very successful piece of middleware software in open banking won’t be able to just come up with a health version or energy version, because if the standards are completely different and they don’t talk to each other, then we lose all those economies of scale and scope, and most importantly of all, we slow ourselves down.”
Penrose added he received confirmation that data standards will be different across different sectors “because of the different starting points”.
“But those data standards will all be inter-operable. So that means you will be able – if you’ve got a successful, accurate, successful utility piece of middleware – you will be able to make it work across multiple different sectors as well. You can’t just clone it, those standards will be different for different sectors, but they will be inter-operable. And that should mean that we can get there and come up with something beautiful.”
He says the two points on a roadmap and data standards matter “because we ain’t the only country doing this” and while the UK is leading the way on open-banking, it means “we’re the ones everyone wants to copy and everyone envies and other countries are “snapping at our heels”.
He lists Brazil, Columbia, Australia all “not just wanting a piece of our lunch but they want to eat all of it and become the centre of the future as they can all see the transformative effects it can have on their economies and their opportunities through disruption to overtake other established competitors”.
“That’s why pace matters to beat all the other darlings to get there first so that we get to the finishing line first”, Penrose concludes.
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