The UK government is on the lookout for an IT supplier to help build open banking features into its payment platform. The Government Digital Service (GDS) plans to kick off this work in July, with a contract valued at £49 million set to last three years. They’re seeking a payment service provider to enhance the Gov.uk Pay platform, focusing on credit and debit card processing as well as open banking payments.
GDS is encouraging small and medium-sized enterprises (SMEs) to join the bidding race for this lucrative contract. The fintech sector, rich with startups and SMEs, holds expertise in open banking, making it a fitting target for the government’s needs.
The Gov.uk Pay platform plays a critical role by enabling central government bodies, local councils, police, and the NHS to process payments online. This shift has streamlined financial operations and reduced the stress of administrative tasks. Since its launch in September 2016, Gov.uk Pay has handled over 94 million transactions, reaching a total value of around £6 billion. The government highlights that this platform is a versatile tool used by over 1,000 different public services, cutting down on time and costs while minimizing repetitive efforts.
User experience is another focus. Gov.uk Pay aims to provide consistent, reliable access, making it easier for citizens to pay for public services. The platform has generated significant savings for the public sector, and the initial contract allows for two optional one-year extensions.
Open banking, supported by application programming interfaces (APIs), lets consumers share their banking information with third-party apps and websites, but only with their consent. New regulations from the Competition and Markets Authority in 2018 compelled UK banks to adopt these open banking practices, pushing for a more competitive climate in finance, traditionally controlled by a few major players. With customer permission, banks can share data via APIs, allowing businesses to create customized services.
Recent statistics from Open Banking Limited (OBL), the organization overseeing open banking in the UK, show about 11.7 million active users using open banking products, with over 22.1 million open banking payments occurring each month. Since 2018, UK consumers have made a remarkable 400 million successful open banking payments, contributing to an estimated £4 billion worth of impact on the economy.
Marion King, chair and trustee at OBL, recently remarked on the journey of open banking over the past seven years, recognizing the financial innovation it has sparked. She noted that we’re at a crucial moment for open banking, with upcoming regulations that will create a more sustainable framework while paving the way for open finance and advanced data initiatives.