UK’s New Data Bill Expands Open Banking Framework to Create £10bn Smart Data Economy Across Multiple Sectors
Three Key Facts
- The UK Government has passed the Data (Use and Access) Bill, expanding open banking into open finance across multiple sectors including energy, telecoms, transport, and retail
- The legislation is projected to create a smart data economy worth an estimated £10 billion over the next 10 years
- The bill serves as a blueprint for more than 60 other jurisdictions globally, positioning the UK as a leader in open finance regulation
Introduction
The UK has taken a decisive step toward transforming its financial landscape with the passage of the Data (Use and Access) Bill through Parliament. This landmark legislation expands the successful open banking framework into comprehensive open finance, enabling secure data sharing across multiple business sectors.
The DUA Bill represents more than a regulatory update—it establishes the foundation for a connected data economy that promises to reshape how consumers interact with financial services. By broadening data sharing beyond traditional banking to include insurance, investments, pensions, and other sectors, the legislation addresses the growing demand for integrated financial solutions.
Key Developments
According to Finextra, the legislation marks a fundamental shift from payment-focused open banking to comprehensive open finance. The bill introduces “recognised legitimate interests” as a new lawful basis for processing personal data, balancing innovation with consumer protection.
The legislation encompasses seven distinct parts, ranging from customer data access to digital verification services. Part 1 specifically enables “smart data” applications beyond finance, while Part 5 modernizes the UK’s data protection regime with amendments to UK GDPR.
The UK Centre for Finance, Innovation and Technology has already developed prototype applications targeting vulnerable consumers and SME loan assessments. These early implementations demonstrate the practical applications of expanded data sharing capabilities.
Market Impact
The global open banking market reached $28.2 billion in 2024, with projections showing 19.2% compound annual growth through 2034. The expansion to open finance accelerates this trajectory by unlocking new revenue streams across financial services.
Insurance companies can now offer consolidated views of pension products and access loan data from multiple banks within single applications. Mortgage data sharing facilitates property market transactions, while utility companies can provide optimized billing solutions for consumers.
The Joint Regulatory Oversight Committee has made significant progress on commercial Variable Recurring Payments, enabling market choice and innovation in account-to-account payments for e-commerce and regulated financial services.
Strategic Insights
The legislation reduces market concentration by mandating data portability and access, creating opportunities for new entrants and smaller fintechs. This levels the competitive playing field against incumbent financial institutions.
Companies can now develop products aggregating data from mortgages, investments, pensions, and insurance, providing consumers with comprehensive financial overviews. Non-financial companies gain the ability to embed financial products directly into their platforms using standardized APIs.
The bill addresses international data transfer challenges while maintaining alignment with global standards. This approach supports the development of cross-border data sharing capabilities as the industry moves toward interoperability.
Expert Opinions and Data
Open Banking Limited CEO Henk Van Hulle characterizes the legislation as “a landmark moment for the sector, but it is just the beginning.” He emphasizes that collaboration between government, regulators, and industry will be crucial for realizing the connected data economy vision.
Marion King, OBL Trustee, highlights the synergy between the DUA Bill and the National Payments Vision, noting that “open banking is in a strong position to support a vibrant fintech sector and economic growth.” This perspective reflects industry confidence in the regulatory framework’s potential.
The legislation establishes secondary legislation needed for open banking’s long-term regulatory framework, placing it on commercially sustainable footing. Van Hulle notes that the UK’s mandated approach has become a blueprint for over 60 jurisdictions worldwide.
Industry groups, including the Open Finance Association, welcome the bill’s potential to extend open banking benefits to broader financial products. Consumer advocacy groups emphasize increased transparency and choice, though some stakeholders express concerns about data security risks requiring vigilant oversight.
The Public Bill Committee will scrutinize the legislation line by line, with meetings scheduled from March 4-18, 2025. This timeline demonstrates the thoroughness of legislative review processes for such significant regulatory changes.
Summary
The Data (Use and Access) Bill establishes the UK as a global leader in open finance regulation, creating a framework that extends successful open banking principles across multiple sectors. The legislation balances innovation opportunities with consumer protection through modernized data governance structures.
The bill’s comprehensive approach addresses technical interoperability, regulatory compliance, and market competition while maintaining focus on consumer empowerment. With prototype applications already demonstrating practical benefits and industry leaders expressing strong support, the foundation exists for realizing the projected £10 billion economic impact over the next decade.
