As the United Kingdom’s government searches for ways to kickstart growth, it needs to look no further than one of its most successful digital innovations of the past decade: Open Banking. Used by 11 million consumers and powering a fintech sector valued at £4 billion, Open Banking demonstrates how putting users in control of their data can create entirely new markets and opportunities. No less importantly, it has helped improve the experience of using digital-banking products, breaking down silos and giving people more choice.
But this success story is just the beginning of what’s possible when we reimagine how data flow through the UK economy. Today, the Tony Blair Institute for Global Change and Startup Coalition are launching our vision to expand this model across industries through three initial Smart Data schemes – potentially unlocking £27 billion in economic value.
Open Finance, Open Energy, Open Property
The economic benefits of Smart Data – meaning the regulated, secure sharing of customer data or non-personalised data sets with authorised private-sector third parties – could be transformative. Our analysis shows that when Open Banking was announced in 2014, it sparked an explosion of startup activity and investment that far outpaced similar sectors. Before the announcement, energy startups were raising more funding than fintech firms. After 2014, fintech investment skyrocketed while other sectors remained flat. This wasn’t just market forces at work – it was the direct result of strategic government action to open up data flows.
That last point is critical. With the Data (Use and Access) Bill set to become law in the spring of this year, the UK will soon have the power to create Open Banking-style data-sharing schemes in any sector. But having these powers and using them effectively are two different things – and the bill leaves it to policymakers to decide on and take specific steps for each industry. Our report sets out how three pioneering schemes could demonstrate the transformative potential of Smart Data.
First – building on the proven success of Open Banking – Open Finance would expand data-sharing to savings, investments, mortgages and pensions. This would enhance financial inclusion and transparency, and spur another wave of fintech innovation.
Second, Open Energy would unlock smart-meter and energy-usage data to support net-zero goals while reducing costs for households. With smart meters now in 60 per cent of all UK households, a strong foundation exists for services that could help people optimise their energy use and access green-energy products. Smart Data is critical to making full use of this treasure trove of information.
Third, Open Property would transform the antiquated house-buying process. The government’s ability to deliver planning reform and get building will be central to its prospects over the next five years. But even if it succeeds, buying one of those new homes will still be bogged down by a cumbersome process with duplicate checks and frustrating manual steps. The large number of transactions that fall through costs potential buyers £260 million, and estate agents and conveyancers £1 billion, a year. Smart Data could streamline this process while improving transparency and reducing fraud. Here, the concept of Smart Data schemes would extend to data held in the public sector, proving the value of operating across artificial data silos.
Open Even More
We identified these three industries because there is already a strong foundation for all three – meaning rapid action is possible. Beyond finance, energy and property, there are endless opportunities to use Smart Data in ways that support the delivery of the government’s missions: unlocking economic growth across sectors; accelerating decarbonisation; reducing fraud to disrupt the business models behind serious and organised crime and make streets safer; creating opportunity through better outcomes for children in early-years settings, young people in schools and adults seeking out new skills; and putting people in control of their health. These opportunities need to be reflected in the government’s Smart Data Roadmap.
But this wider use of Smart Data would also require the different schemes to work together. A new approach to cross-sector collaboration on regulating Smart Data is needed, with the new Regulatory Innovation Office well-placed to take on this job. And on the consumer side, recent developments on digital wallets should be leveraged – with the GOV.UK app set to become a de facto digital ID – so that consumers can see what data are being used in different sectors and have a single hub for granting, reviewing and withdrawing consent.
The prize is significant: £27 billion in economic value, more competitive markets, better services for consumers and a foundation for UK tech leadership. But it will only be achieved if the government moves quickly and strategically to implement these schemes.
Smart Data is a great example of how commercial opportunity and the public good align and reinforce each other. Smart Data schemes can simultaneously drive growth, improve services and give people more control over their information. For a government focused on both economic growth and consumer empowerment, Smart Data offers a proven template for success.