The report from the CMA sets out the importance of digital banking services and the structural changes in how those services are delivered in order to achieve a competitive and efficient banking market for UK retail and small business customers. It will be welcomed by challenger banks as it will help their entry into the lending market where they are at a disadvantage with their relatively small levels of deposit base.
The development and introduction of the Open Banking API standard is highlighted as one the CMA’s foundation measures, and a primary mechanism for introducing a higher level of competition with banking services. As with PSD/2 this can reasonably be expected to have a transformative impact on the customer experience and is indeed one of the most interesting regulatory developments in the digital banking arena.
Looking ahead, it is particularly significant that the report states how these major developments have to go hand-in-hand with a focus on controlling customer data privacy and maintaining service security and resilience. This reiterates a key theme which we as a firm endorse, that the power of digital banking can only be realised through the identification and effective management of digital risks.
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