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UK government open banking tender puts focus on payments

Global Government Forum | Ian Hall | Sep 3, 2020

HMRC open banking tender - UK government open banking tender puts focus on paymentsThe UK’s journey towards implementing open banking to deliver citizen services has taken a significant step forward with the opening of what is believed to be the country’s first government tender specifically for open banking.

In a move that will be greeted by open banking’s advocates as a breakthrough statement of intent, HM Revenue & Customs (HMRC) is running a £3m (US$3.92m) tender for ‘Payment Initiation and Account Information Services’.

HMRC has been working alongside the Open Banking Implementation Entity (OBIE) – a company set up by non-ministerial government department the Competition and Markets Authority (CMA), and  funded by the UK’s nine largest banks and building societies – on devising the procurement exercise.

The technology behind open banking, application programming interfaces (APIs), enables bank account holders to share information with third parties.

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HMRC’s tender focuses on ‘Payment Initiation Services’ (PIS), which – its proponents believe – should mean a simpler and more secure payment process for citizens who wish to pay HMRC via bank transfer.

The aim is that citizens making payments will not need to manually input as many details as would have been required through traditional methods. For example, there would be no need to enter details such as a reference number, payment amount and card number when paying a bill. Instead, customers would need to check and authorise a ‘pre-populated’ payment. Any increased use of bank transfer over card payments should mean cost savings for government.

Aiming to reduce payment costs

“Currently, our bank transfer journey is non-automated which can result in a high volume of customer errors that are resource-intensive to rectify,” according to technical details that relate to the HMRC tender notice. “By providing an innovative, well-designed journey that can be populated with our numerous reference formats and HMRC bank accounts, with little effort from our customers, we believe we can encourage card-payers to move to this more cost-effective method and subsequently reduce our payment associated costs significantly.”

The technical note also demands that the appointed service provider needs to be able to cope with HMRC workflow peaks “throughout the year” and “increased volumes during the contract period”.

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The tender also includes ‘Account Information Services’ (AIS), which enable third parties to access customers’ transactional data to deliver tailored financial services. Use cases for AIS in HMRC are understood to be in the development stage but HMRC included AIS in the tender to avoid the cost of a further procurement.

The HMRC contract would start in February 2021 and run initially for two years.

Cross-government exploration

Open banking, which aims to boost competition and promote transparency and innovation in financial services, is being explored – albeit cautiously – by a growing number of governments worldwide. Though examples of it being used by governments remain limited, it is seen to have significant potential in public service delivery.

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