Smart data isn’t just a buzzy phrase – it will revolutionise financial services sector

Smart data is the key to levelling the playing field for SMEs that have been left behind in the digital revolution, says Lord McNicol

As we gather this week for the Labour Party Conference it is at a pivotal moment for the UK’s future. Labour is setting out our vision for a fairer, more prosperous country, and at the heart of that vision is growth. Growth that isn’t just for the few, but for anyone and everyone. The financial services industry has long been one of Britain’s greatest success stories, and our focus now is on creating the conditions for further success, driven by innovation.

Smart data might not always grab the headlines, but it’s the unsung hero behind one of the most innovative developments in our economy: open banking. Today, open banking is used by over 10m active users in the UK and contributes more than £4bn to the UK economy, attracting significant investment and creating thousands of skilled jobs. It’s no wonder that the world looks to us as leaders in this space. But we cannot afford to rest on our laurels. To secure sustained economic growth – the kind that lifts everyone up – we must build on this foundation and unlock the full potential of smart data.

At its core, smart data is about the safe, secure sharing of customer information with authorised third-party providers. It enables faster credit checks, better account management and more tailored services. But the benefits extend far beyond that. By unleashing the power of smart data, we can offer customers greater choice and improved services not just in banking, but across all sectors. 

Imagine a world where small businesses have the same access to financial tools as big corporations, where consumers can make more informed choices, and where data-driven innovation empowers people, not just institutions.

Take, for example, the remarkable work of Salad Money, a shining example of the social impact that smart data can deliver. Using open banking, Salad Money provides access to financial services for those often excluded from the system. Between 2022 and 2023 alone, the lending service helped its customers save an average of £497 each in interest on loans, keeping £13.4m in household budgets. Even more striking, they identified £36.3m in unclaimed benefits, ensuring that their customers could access an average of £348 per month—or £4,176 per year—that they were entitled to but unaware of. This is the real-world impact of smart data: it lifts people out of financial exclusion and gives them the tools to thrive. It’s this kind of innovation that Labour champions, and it’s why I believe smart data must be central to the UK’s economic strategy.

That’s why I applaud Labour’s introduction of the Digital Information and Smart Data Bill. This legislation is crucial for promoting competition, driving innovation and creating the right conditions for investment. And let’s be clear – this isn’t just about tech for tech’s sake. The ultimate goal here is to improve people’s lives, whether that’s through more control over personal data or the creation of thousands of new jobs in a burgeoning digital economy. Smart data will play a pivotal role in securing the highest sustained growth in the G7, ensuring the benefits of economic expansion are felt across the whole country.

But to achieve this, we need strong leadership and decisive action from the government. There will be several opportunities in the near future for the Chancellor to show leadership in this area. Prioritising smart data – and the legislation that will unlock its potential – will send the right signals to the market, attracting investment and unleashing the potential for growth across multiple sectors.

Customers are demanding more. They want greater choice, greener options and services that reflect the complexity of modern life. Our businesses are ready to meet this demand. Smart data will help them do just that, underpinning the tools and innovations that allow customers to make informed decisions and take control of their finances.

We’ve seen what’s possible with open banking, which was the first step – an ambitious move towards a data-driven economy. Now it’s time to go further. The transition to a Long-Term Regulatory Framework for open banking is crucial, and Labour has committed to implementing a pro-innovation regulatory framework that will drive the UK forwards as a global leader in smart data.

Smart data isn’t just a buzzy phrase – it’s the key to levelling the playing field for small and medium-sized enterprises that have been left behind in the digital revolution. By enabling cross-sector data innovation, we can ensure that businesses of all sizes, and consumers in all corners of the country, benefit from the coming transformation.

Labour is ambitious for the future of our country. We’ve seen the economic impact of open banking, and it makes perfect sense to replicate this success across other sectors. A smart data economy, underpinned by legislation like the Digital Information and Smart Data Bill, will be the cornerstone of the UK’s future economic success, promoting competition in a safe, stable way while empowering individuals and businesses alike.

The future really is here – and it’s taking the form of a smart data economy that will unlock opportunities, deliver growth and put the UK on a path to long-term prosperity. Let’s seize it.