The recent kick off of the Open Savings and Investments (OSI) programme by the Tax Incentivised Savings Association (TISA) is a welcome initiative to bring the investment management industry in the UK towards a more open, innovative, customer-focused and digital-friendly landscape. Whilst the intention of the participants should be applauded, there are significant challenges in front of this initiative which have been foreshadowed by how Open Banking has been implemented over the last few years. For those involved we have identified some key areas from our Open Banking experience that the initiative will need to get right in order to be successful.
- Maintaining trust in the ecosystem is crucial for adoption - Trust in the OSI Framework is critical to success not just for participants but most importantly from an end customer perspective. This trust will need to apply to all elements of the proposed solutions whether that is the legal and regulatory requirements for participants to the security of the standards used to authenticate both participants and end customers
- Ensuring representation from all parts of the ecosystem - In order for OSI to have the impact the industry desires it needs to ensure it is not perceived as a closed shop and that voices outside of established firms are heard to ensure that new entrants or not traditional voices are not shut out of the conversations and innovation stifled
- Leveraging existing standards - OSI have already recognised that they should be looking to re-use existing data and security standards already developed as a part of STAR (the body responsible for transfers and re-registration processes). However, unlike Open Banking where penetration of online banking allows a near blanket method of providing secure customer access to the ecosystem, there is no consistent way for OSI to securely identify customers accessing customer data across organisations at present
- Being clear on what it will and won’t deliver - The access and data provided will have constraints. It pays to acknowledge this early both internally and to end customers. The investment management industry has not traditionally been required to provide data to customers on a high frequency basis as is currently seen in both Banking and Investment Banking arenas. It is unlikely that at the initial launch of OSI that this position will have markedly changed
- There is no mandatory requirement to participate - Perhaps the biggest challenge that OSI faces is that unlike Open Banking (through PSDII and the CMA) there is no legal or regulatory requirement to participate. The risk here is that upon launch customers will only be able to draw data from a limited number of participants, this hugely reduces the impact and likely uptake of the proposition if customers are unable to use it in the way they expect. The initiative will need to seek ways of driving up participation to prevent this from happening.
The initiative has some very ambitious timelines and based on the above has a lot of questions to answer. We do believe that this initiative will bring real benefits to consumers and potentially challenge existing business models in what has traditionally been an industry that has been behind the curve in terms of customer engagement and digital innovation. For more on how existing business models are being challenged in this industry see Chris Taylor’s blog here.