HM Revenue & Customs (HMRC) has awarded the first UK government open banking contract to Ecospend, a London-based fintech company.
The contract is worth up to £3m ($4.1m) and has been inked following a tender process for ‘Payment Initiation and Account Information Services’, revealed by Global Government Fintech, that kicked off just under six months ago. The appointment is a feather in the cap for Ecospend, which will provide account-to-account payment software that will allow HMRC to process payments.
HMRC worked closely with the Open Banking Implementation Entity (OBIE) – the body set up by the Competition and Markets Authority (CMA) to deliver open banking – on the procurement exercise.
Open banking involves the use of what are known as open application programming interfaces (APIs) to enable bank account holders to share their financial data with third parties. The UK is widely seen as a leading nation when it comes to rolling out open banking, with more than 2.5 million UK customers and businesses now using open banking-enabled products. But this appointment is the first time that the government has run a procurement process specifically for open banking implementation.
OBIE’s head of ecosystem engagement Simon Lyons heralded the procurement’s conclusion as “a big step forward for adoption as it will help bring the benefits of open banking to the entire UK population”.
Aiming to reduce errors, fraud and costs
The contract outlines HMRC’s aim of streamlining and automating parts of its payment processes to reduce errors, fraud and costs, as well as improving ease-of-use for taxpayers and users of HMRC’s online services more broadly.
From a citizen’s perspective, the aim is that people making payments to HMRC will not need to manually input as many details. 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. Increased use of bank transfer over card payments should mean cost savings for government.
“The use of open banking technology will revolutionise the often time-consuming manual process of filling in tax returns and will dramatically streamline the processes through automation,” said Lyons this week. “It is also just another example of the potential of open banking to provide a tangible benefit to consumers. This effort will also serve to deliver on ministers’ policy intentions to increase the overall capability of, and competition in, the UK’s banking and payment systems.”
Account-to-account payment software
“HMRC are always looking for ways to make it easier for our customers to deal with us,” the department’s head of payments, Nick Down, told Global Government Fintech. “We are keen to participate in and support the fast-moving developments in open banking because of its potential to generate real improvements, and this contract means we can start to draw on the opportunities that fintech provides. We are looking forward to working with Ecospend to provide Payment Initiation Services that will provide an easy, safe and secure way for our customers to pay us from home or using a smartphone.”
Metin Erkman, who founded Ecospend in 2017 and is the company’s chief executive, said: “Since founding Ecospend, we have spent three years focused on building our underlying technology and API in-house. Because of this, we’re now able to provide the best solutions, such as our account-to-account payment system for HMRC.”
Wider UK government strategy around open banking is led by the Government Banking Service, which supported HMRC’s procurement process. The Crown Commercial Service’s Payment Acceptance Framework already lists various fintech companies as suppliers.
HMRC also recently launched a request for information (RFI) on ‘tax-compliant banking products’. This process, also revealed by Global Government Fintech, closed on 31 December 2020.
INTERESTED IN MORE GLOBAL GOVERNMENT FINTECH OPEN BANKING COVERAGE?
Click here for Global Government Fintech’s dedicated topic section
Click here for Global Government Fintech’s interview with OBIE trustee Imran Gulamhuseinwala
Click here for Global Government Fintech’s review of global governments’ explorations of open banking’s potential for delivering citizen services
Click here for Global Government Fintech’s analysis of the UK government’s explorations of open banking’s potential to ‘streamline’ tax payments for small businesses