Public finances: the power of fintech in service delivery

Using capabilities honed in the UK’s banking sector, NS&I Government Payment Services (NS&I GPS) manages monetary transactions across government. And the HM Treasury agency is now gearing up for the next revolution in financial technology: ‘open banking’ promises to sweep away the boundaries between citizens’ digital interactions with public and private services

“No organisation or government controls the pace of change or disruption,” said Dax Harkins, a director at NS&I Government Payment Services. “Change is coming. Citizens are getting used to it; they’re demanding it.” It is the job of public agencies, he argued, to get ahead of the game.

Harkins was speaking at Innovation 2019: a one-day conference on innovation in government, held in London 28 February. And NS&I has a long history of breaking fresh ground: founded in 1861 “to give the working man a place to save,” he explained, NS&I nowadays provides banking services to 25m people – creating a £157bn pot that enables government to reduce the cost of public borrowing. As the fourth largest savings organisation in the UK, the HM Treasury agency has learned how to evolve and innovate as rapidly as Britain’s other major banks and building societies.

In recent years, Harkins explained, NS&I has taken on a new challenge. “We’ve seen the pace of change in financial services really accelerate; and at the same time, there’s been real pressure on budgets in government,” he told the 500-strong audience. “We realised that our banking and accounts and payments capabilities, honed in a competitive market, could be reused across government to deliver other services.”

So NS&I set up its Government Payment Services arm, and began providing financial services to other departments and public bodies – managing the payments that are at the heart of many government services.  

NS&I GPS delivers the Help to Save scheme, for example, and the government’s Tax-Free Childcare and 30 hours free childcare services: the latter is, he commented, “a real customer-centric service that hides the complexity of government in the background.” Its government customers include the Ministry of Justice, HM Revenue & Customs and HM Treasury. And its well-established systems, technical expertise and economies of scale enable it to radically improve efficiency in public sector transactions: at the Court Funds Office, it reduced operating costs by some 40%.

The next wave of innovation in financial services, Harkins noted, will be built around open banking: the use of API technologies to allow automated data-sharing between different platforms. Soon, NS&I customers will be able to choose to share their account data with other banks, fintech businesses and technology firms.

These third parties will never see customers’ login details – when people choose to share their data, they’re redirected to the NS&I site to provide permission directly – but with that link established, people will be able to bring their NS&I account data together with other information and services in specialist apps. They could, for example, view real-time balances in the accounts they hold across a range of organisations, or link their accounts to specialist services such as investment, savings and stock trading apps.

“And of course, we’re looking to share this with the rest of government, so that they can take advantage of this open banking capability – using our authorised, trusted and approved entry points into the system,” Harkins continued. Soon, government bodies could use NS&I’s services to link their own systems to those of banks, fintech businesses and other specialist providers. Then, “if a department is providing a service for a citizen, the service user will be able to see and interact with that public service’s data in their banking app – using an app with which they’re familiar and comfortable,” he said. “These are exciting times for us!”

In practice, this might mean that citizens could choose to allow a public body access to some of their financial information – enabling providers, for example, to automatically calculate their eligibility for benefits without the need to fill in lengthy forms. Or they could use their banking app to monitor their use of public services with a financial element, such as Tax-Free Childcare.

These technologies promise to provide faster and more convenient public services, whilst improving communications and cutting administrative work. And with NS&I GPS as an in-house provider of the key technologies, public bodies have access to a Crown-to-Crown supplier whose capabilities rival those of the country’s biggest banks.

Under the pressure of competing in private sector markets, NS&I has built up financial systems and expertise which it’s applying to public service delivery – easing transactions and citizen interactions across government. Now it’s developing open banking services which will enable citizens to connect their banking activities with their use of public services.

To meet rising public expectations in today’s fast-moving, interconnected world, Dax Harkins believes, public bodies must stay at the cutting edge of service delivery – making themselves as accessible, well-designed and user-friendly as the best private businesses.

“We don’t have a choice,” he concluded. “Disruption and change are coming, and we’ve got to embrace it and get involved. Yes, we need to direct it – but at the same time, we’ve got to push forward.”

To learn more about NS&I GPS and the potential of open banking, please speak to their expert team today: visit www.nsandi-gps.com or email info@nsandi-gps.com.

For more on service transformation, see our full report on the Innovation 2019 session – with speakers from Germany, France, Estonia and the UK