The open banking implementation entity is better known as just OBIE. Both the abbreviation and the full name are heard about in the media and by people who are interested in finance. But what exactly is OBIE responsible for, what does it do and why does it matter? This article will focus on these topics and help you find out everything that one should know about the entity for open banking implementation.
The initial stages of OBIE creation can be traced back to 2016, when the UK’s very own CMA (Competition and Markets Authority) published research on the financial market. Even though this was apparent for everyone in the field, the problem was put into the spotlight of legislators. The data evaluation in the research showed that legacy banks have a significant advantage over newcomers in the market and don’t have to invest nearly as much to achieve growth, in comparison to new market entrants. This wouldn’t be a shock, but the banking sector was stagnating and thus, the inception and launch of OBIE was recommended.
Open banking, as a concept, was introduced through a variety of different legislative acts and new regulations. OBIE was implemented as a governing body which would be able to monitor everything, related to the integration and management of the open banking standard.
How does the Open Banking Implementation Entity work?
The OBIE is exclusive to the United Kingdom, meaning it only operates within the borders of this country. Elsewhere you might find similar organizations with comparable duties and responsibilities, but OBIE only concerns the UK.
You can categorize the operation of this entity into three different groups. Implementation with regards to vital services and infrastructure, supervision of everything open-banking related and helping create and develop a landscape for open banking.
The foundation of the OBIE was made much easier thanks to the collaboration of the CMA9 or the nine largest banks in the United Kingdom at the moment. These were: Bank of Ireland, Allied Irish Banks, HSBC, Danske Bank, Santander, RBS, Nationwide, Barclays and Lloyds. Other firms also played a significant role but it is these nine that made it sure that the open banking model would be introduced from top to bottom.
As of now, OBIE is responsible for defining the terms and standards which are implemented by legislatures and then, must be followed by the CMA9 and other private and corporate entities in the field of open banking.
Their goal is to not just make one final set of regulations but to keep in touch with the developers, consumer needs and every single market participant in order to continuously work towards the realization of open banking’s core principles – increased competition, better services for consumers and improved data security.