Anyone for a game of ping pong?
It feels like we have been talking about the arrival of the UK’s new Smart Data powers for an awfully long time. These powers are the understated star within the sprawling Data (Use and Access) Bill, already in its third iteration, which is now rebounding back and forth between the two legislative chambers in a process affectionately known as ping pong. There is just one final sticking point dragging out this rally, though it’s a pretty big one – an unrelated amendment regarding the use of copyrighted material as AI training data. So near, and seemingly still, so far.
Yet somehow the momentum for Smart Data just keeps on building. That is in large part down to the fantastic growing community of advocates, innovators, and entrepreneurs that are united by a shared vision for a user-centric data-led economy.
That community is coming together in a show of force next week at the Smart Data Forum, which we are proud to sponsor for a second time. As ping continues to follow pong, it is critical for politicians and policy makers to hear first hand just how important Smart Data is, and what fertile conditions for growth it can provide. I can’t wait to be a part of that discussion on 13 June, where I’ll be joining a panel about business models and consumer trust.
Why does DTI care so much about Smart Data?
Smart Data is a term used in the UK to describe a regulatory initiative that enables secure user-led sharing of personal data with authorised third parties. This term has increasingly been used in the UK to describe Open Banking, which enables people to transfer their account and transaction data to third-party apps for purposes such as credit checks and budget management.
As an organisation that is dedicated to empowering technology users to transfer data from one service to another, it would be hard to imagine a regulatory initiative that is more closely aligned with DTI’s goals.
Smart Data is equally well-aligned with the UK government’s objectives for innovation-fuelled economic growth. It said as much in 2024, stating that smart data would facilitate* “the data economy to drive growth and innovation, and to enable services that ensure businesses and consumers get more for their money.” *Our 2024 UK vision paper carried a similar message, with economic growth, market openness, and data portability all being intrinsically linked.
The banking sector was the guinea pig for Smart Data, with the UK leading the way globally from the outset. It is no coincidence that the UK subsequently became a leading global fintech hub, attracting billions of pounds of inward investment, second only behind the US in the global investment rankings, and with four times more fintech unicorns than any other European country. Most recognise Open Banking isn’t yet the finished article, but it’s gone way past proof of concept.
We can assume, once the UK government has finished its parliamentary table tennis match, it will aim its new powers towards sectors where it will get the biggest bang for its buck – those where data is a critical input and/or output of products and services. While the focus under the previous government was on traditional regulated markets, UK policy makers’ attention will inevitably also turn to technology markets, where data is now so fundamental to innovation and competition.
In fact, it appears that this shift has already begun. Reporting in its workplan for the current year, the Digital Regulation Cooperation Forum (DRCF) signalled it is conducting a review of the future of a data-led economy and the opportunities this could herald, partnering with a wider group of regulators where applicable. Bringing together the CMA, ICO, FCA and Ofcom, the DRCF is predominantly focused on areas of regulatory overlap in digital markets.
Adopting a principles-based approach to smart data
This places the UK’s Smart Data agenda firmly at the heart of DTI’s mission, making it a top priority for us to engage with. We intend to be a supportive resource to the government as it identifies, designs, and ultimately implements new schemes. In doing so, our advice will be anchored to the following principles, developed in part from DTI’s core values, as well as our experiences with implementing data portability in other contexts:
- Focus on outcomes: any obligations on organisations regarding data portability should aim to be precise about the outcomes that must be achieved, and avoid being overly prescriptive about specific technologies or design decisions. Alignment and interoperability are important goals to keep in mind, but the optimal functionality or architecture of an API may vary by company, sector, and data type. With ambitions for sector- or even economy-wide data sharing schemes, perfect may very well be the enemy of the good.
- Keep users at the centre: this one should go without saying, but it is too easy for policy folk and technical experts to get drawn into the weeds and forget who it is all actually for. For Smart Data Schemes to be successful, they must be designed around the needs, expectations, and preferences of real technology users. Real people. This will require thoughtful research and ongoing consumer engagement.
- Scope with reciprocal transfers in mind: regardless of the sector, a widely scoped scheme will naturally lend itself to a healthier ecosystem with reciprocal transfers more widely available. Greater reciprocity will promote competition, better empower consumers, and facilitate more innovation.
- Don’t re-invent the wheel: this is key to moving quickly, and avoiding burdensome duplication and complexity. For example, if something is working for Open Banking, it will likely do for Open Finance too. In digital markets, substantial progress has been made already in response to the Digital Markets Act, including in the UK; it would be counterproductive to design a scheme that cuts across those existing investments.
- Establish trust from the outset: trust is paramount for portability. The Open Banking Directory could be expanded to accommodate new schemes, certainly where there is likely to be overlap in the organisations registering to be Third Party Providers (TPPs). Equally, our Trust Registry, which is now in a pilot phase, will provide an off-the-shelf solution for establishing trust for data transfers in the technology sector.
Smart Data Scheme design will no doubt stumble across a range of complex policy and technical challenges that can’t be solved by simple principles. These will be our starting point, but we are ready to dig deeper when the time comes.
In the meantime, we wait patiently for the ping pong rally to reach its conclusion, and we look forward to an enthralling conversation with friends at the Smart Data Forum next week.