Creating a smart data economy

Barry O’Donohoe at Raidiam outlines the opportunities for the UK from building a smart data economy and explains how Open Banking is showing the way

 

The UK government’s ambition to become a tech superpower by 2030, as laid out in its Science and Technology Framework, has seen a lot of stop-and-start with limited progress delivered. The UK still lags behind some of its more advanced contemporaries. Open Banking has set an example in the UK with data-sharing ecosystems, but the government has not yet been able to tap into existing tech to unlock smart data meaningfully. 

 

Despite this, Open Banking has proved that creating a smart data economy is possible; and in the Budget last October, it seems like the government is finally starting to take notice. With a heavy focus on investment in digital transformation, it looks to be taking steps to unlock the potential of the wealth of data available to it. Proposals like the National Data Library for public assets and the Open Data scheme ‘Fuel Finder’ will rely heavily on the precedents for data sharing pioneered by Open Banking. 

 

The government also recently introduced the Data Use and Access Bill to Parliament, specifically geared towards supporting the existing Open Banking framework and developing new smart data schemes. Not only will it propel the UK forward as a tech superpower but it is also expected to generate roughly £10 billion in the UK economy over the next decade. It’s set to cut down on bureaucracy in the police force, make NHS data easily transferable, and improve identity verification tasks across the sector. 

 

As Open Banking is increasingly recognised for its potential impact on the smart data economy, it’s about time we laid out where we’ve been, and where smart data could take us. 

 

Open Banking foundations

It’s beyond any doubt that Open Banking is a significant force for good in the UK economy. Despite its sometimes under-the-radar presence, 1 in 7 people across the country are already being served by it. Pick-up is even higher for small and medium-sized enterprises with 20% regularly using Open Banking technology. That same research also details the roughly 5,000 skilled digital jobs it has created and the £4 billion that the ecosystem is worth to the UK economy as it drives continued investment. 

 

Considering that Open Banking in the UK only became a market in 2018, it’s astonishing that over 250 innovative providers and propositions are already thriving in it, driving benefits and adding value for the UK as a whole. Not only is it improving competition, but it’s also playing a significant role in the democratisation of financial services (FS). It’s creating economic opportunity for the most vulnerable in our society, putting them in the driving seat of their financial lives for the first time. 

 

Moving in the direction of smart data

Over nearly seven years, Open Banking in the UK has built trusted, transferable frameworks and standards. There is now an immense opportunity to build on this to unlock smart data for the wider economy, expanding the scope of data across FS completely and out to non-FS sectors. With the necessary frameworks already operating within the well-oiled machine of Open Banking, smart data doesn’t need to reinvent the wheel. What’s more, the market already has a solid level of confidence and trust in how Open Banking works, as it reaches its seventh birthday this month (January 13th), it’s proven it can stand the test of time. 

 

Moving forward, interoperability needs to be the focus. Creating a common standard for all financial institutions and systems to exchange data securely is key to expanding the remit of the Open Banking ecosystems into new sectors. Fortunately, as the first to develop Open Banking as a regulatory framework, the UK has built up a significant amount of intellectual capital. Those skilled digital jobs mentioned earlier brought with them some exceptionally skilled digital talent that can be tapped to accelerate our progress to a smart data future. 

 

The next ‘smart’ steps

To make real, tangible progress towards a true smart data economy, the UK needs to learn from advances in other markets. Despite being the first off the mark, we’ve lagged and countries that were following have now overtaken us. But it’s not too late to regain that global leadership position that we once had. 

 

The answer to this is simple. For the government to achieve these ambitions, it needs to step up. We need strong political leadership from the fresh Labour government, particularly when it comes to the Data Information and Smart Data (DISD) Bill. Originally introduced in 2023 under a different name but revived by the new government, it’s an essential part of the puzzle of smart data. It contains key guidance on establishing smart data frameworks and securing digital identity products – vital elements for building standardised infrastructure and interoperable standards. After lengthy (and some would say unnecessary) delays from its earlier iteration, the government needs to take serious steps to steward the DISD Bill through the Houses and expedite any secondary legislation. 

 

An allocation of government investment would also not go amiss. For Open Banking to create this smart data economy, we first need to form a separate entity that can oversee and sustain the development of the core capabilities and ecosystem building blocks. With this in place, we can create a commercial ecosystem model on a non-profit basis that can underpin smart data. This is a critical step along the way to ensure that the private sector does not control digital public infrastructure, guaranteeing that its outcomes are protected against any purely commercial agendas that could undermine the interests of consumers and businesses. 

 

Addressing these core challenges will be crucial to building our smart data economy. The success of such a new market effort will ultimately hinge on strong leadership from our government. We need a clear and actionable roadmap of what we’re working toward and when. With this in place, we can unlock investment in our smart data future and mobilise the industry response even further. 

 

‘Smart data economy’ may sound like a high-tech term; but putting aside all the technical context, it’s simple. Achieving this will allow us to promote equal opportunities, diverse access to goods and services, and ultimately, enable us to become a true tech superpower.

 

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Barry O’Donohoe is CEO and co-founder at Raidiam 

 

Main image courtesy of iStockPhoto.com and ismagilov