The DRCF is committed to promoting debate and better understanding of new technologies, their potential impacts across the economy, and the role of regulatory cooperation in enabling their safe and trusted adoption. One of the ways we do this is through publishing papers and articles from DRCF researchers. The findings presented in this publication are contributions to debate and do not represent or imply the views of any of the DRCF member regulators and should not be interpreted as such. They do not represent a statement or indication of the DRCF members' regulatory policies.
About the article
As part of its 2025/26 Workplan, the DRCF set out its plan to conduct a review of the future of Smart Data in the UK. Our aim for this work was twofold: to build a collective knowledge and understanding of the future of Smart Data schemes, including the core standards and considerations needed, and identify areas in which regulatory collaboration can unlock innovation and better outcomes for consumers.
To gather insights on the future development of Smart Data, we interviewed 14 stakeholders from industry, regulators, and civil society on the future of Smart Data schemes, the cross-sector opportunities and challenges, and their views on the standards, technologies, and collaboration needed to enable coherent, interoperable frameworks. We also sought views on the role of regulators in enabling the safe development of Smart Data schemes, given our unique positioning at the intersection of four of the UK’s largest regulators. The interviews with stakeholders have been anonymised, to allow for a full and broad discussion.
This article sets out our findings from the interviews, detailing the key themes including potential opportunities and challenges in developing future cross sector Smart Data schemes and the role regulators could play in ensuring future Smart Data schemes are secure, interoperable and work well for consumers while protecting them from potential risks. Stakeholders identified three key challenges in the development of cross sector smart data schemes: ensuring interoperability without delaying innovation, developing consent mechanisms that allow for consumers to deliver meaningful consent without creating too much friction or confusion for consumers, and creating incentives for Data Holders to participate in schemes. They noted that stronger regulatory cooperation could help address these challenges by promoting greater consistency and clarity.
Separately, as part of this project we have published a paper: ‘Smart Data Frameworks: An International Comparative Analysis and Strategic Considerations’, which lays out the existing designs of Smart Data schemes in the UK and Internationally. Readers are encouraged to consult this paper to build an understanding of the current governance and legal frameworks underpinning modern Smart Data schemes. As part of the DRCF’s workplan for 2026/27 we will continue convening our knowledge-sharing network of smart data experts across our member regulators to exchange information and good practices and providing a regulatory perspective to the Department for Business and Trade’s forthcoming Guidebook on Smart Data schemes.
What is Smart Data?
Smart Data schemes allow the secure sharing of consumer or business data with authorised third parties (ATPs) to deliver a range of products and services [1]. The UK already has an established Smart Data scheme in the banking sector - known as Open Banking. It was introduced as a result of a landmark report on the UK’s retail banking market, published by the CMA in 2016. As part of the report, the CMA ordered the nine largest retail banks in the UK to allow ATP access to their data upon consumer consent. Through Open Banking, consumers are now able to securely share their banking data, enabling businesses to provide a range of innovative products and services such as account dashboards, ‘round up’ saving options and making secure payments online via a banking app. Open Banking has subsequently developed into a huge success for the UK economy, growing to over 15 million users in the UK as of July 2025 [2].
Recently, the government has sought to build on the success of Open Banking through the Data Use and Access Act 2025 (DUA), which establishes the legal framework for Smart Data schemes to be mandated outside the retail banking sector. Under the DUA, Smart Data schemes can be established in sectors across the UK economy such as finance, energy, telecommunications, transport retail and home buying. As discussed in our article last year, the FCA and ICO are supporting efforts to develop Open Finance, which aims to extend “Open Banking-like data sharing to a wider range of financial products, such as savings, investments, pensions and insurance” [3]. In other sectors, innovators are being encouraged to develop Smart Data products through the ‘Smart Data Challenge Prize’ [4]. With the development of these schemes, consumers will benefit from innovators finding new ways be able to utilise their data to save money, make informed financial decisions and streamline processes. If data sharing schemes do not develop organically through industry innovation, the relevant government department for the sector can use powers under the DUA to set up a mandatory Smart Data scheme if deemed beneficial.
A future in which Smart Data schemes are developed in multiple sectors beyond Open Banking will unlock the opportunity for innovators to combine data from different sectors to create novel products and services for consumers. For example, last year’s winner of the Smart Data Challenge Prize, Moverly and the Open Data Property Association, created the ‘Digital Property Pack’ that combines data from the property, energy and banking sector to make it easier for consumers to share their data during the homebuying process, reducing transaction times [5]. So called cross sector Smart Data schemes were identified by stakeholders we interviewed as having significant potential for creating value for consumers and offering a critical source of growth and innovation within the UK economy.
Key Findings
Through our stakeholder engagement we identified four themes that underpin the future success of Smart Data in the UK and the role of regulators in supporting them. These are: interoperability; consent and accreditation; incentives for data holders; and beneficial cross regulatory collaboration.
Ensuring Interoperability without Delaying Innovation
When encouraging the development of cross sector schemes, stakeholders agreed on the importance of maintaining interoperability between Smart Data schemes in different sectors and between data holders. They highlighted the importance of both technological consistency between schemes and consistency in the policy and standards that underpin them. In practice, ensuring this would enable data to be transferred across different providers and sectors seamlessly, reducing friction and enabling innovation.
Despite the broad support for interoperability, there were some difficulties highlighted. For example, some stakeholders believed that mandating interoperability across all sectors would slow innovation, as sectors with more advanced capabilities to hold and share data would need to wait for others to catch up, delaying the development of schemes.
One stakeholder underlined the importance of allowing sectors time to develop their own standards and frameworks and that there is not a ‘one size fits all’ approach to developing them. In order to avoid issues, some stakeholders argued that technical and regulatory frameworks between sectors should be brought together and made interoperable after schemes have had time to mature within their own sectors.
In contrast, others took the view that interoperability should be ensured from the outset. These stakeholders argued that standards and technical frameworks are likely to diverge significantly as they develop. In their view, bringing sectors together after they had developed their own schemes would be difficult and may prevent the development and so fail to release true value from cross sector data sharing.
Stakeholders also gave mixed views on the role of government and regulators in ensuring interoperability. Some thought that cross sector schemes deliver greater value to the public and thus, favoured the government mandating that schemes be interoperable. Another suggested that that the government could encourage interoperability by championing the development of a single cross sector use case, rather than promoting sector specific schemes. They took the view that government was best placed to ensure interoperability of consent mechanisms but should leave technical standards to the market.
In addition to cross sector interoperability, one stakeholder noted the importance of ensuring interoperability between UK Smart Data standards and other schemes internationally.
Fostering Consumer Trust in Smart Data Schemes
Consent
Everyone we interviewed agreed that a comprehensive consent mechanism is crucial for allowing consumers to retain control of their data and ensure it is used solely as they agree. Failure to deliver meaningful consent mechanisms within Smart Data schemes risks undermining consumer privacy and damaging consumer trust in the schemes themselves, therefore lowering overall adoption.
However, as Smart Data schemes become more complex, so too do the consumer consent mechanisms needed to support them. As one of our interviewees identified, even a simple cross-sector use cases may involve over 70 data suppliers. Requiring consumers to provide consent to each of these suppliers would be burdensome. We heard from stakeholders that complexity in the consent process risks creating too much friction and confusion for consumers, thereby limiting the value of Smart Data schemes in saving time and potentially reducing uptake.
Some argued that in cross-sector Smart Data schemes, consent models should shift from a ‘one to one’ consent model, where consumers consent for their data to be used by each ATP, to a ‘one to many’ model, where consumers would provide consent once for access by a bundle of ATPs and data holders. However, the risk in implementing this model is that consumers may not provide clear, granular consent to each use of their data and therefore may find their data being used for purposes to which they did not knowingly consent.
Stakeholders delivered mixed views on the viability of consent dashboards – where consumers can track and manage in one place the datasets relating to them, the providers of those datasets and the consents they have given to sharing. These dashboards aim to help consumers to retain control over the use of their data and are being developed in the UK in sectors such as energy [6]. However, some stakeholders expressed concerns that dashboards may not provide sufficient clarity over what 'opting out' would mean for the functionality of the Smart Data scheme and therefore the end product or service for the consumer.
One stakeholder proposed that ‘personal data intermediaries’ could help map the consumer consent journey for complex Smart Data schemes, citing the Department of Science Innovation and Technology (DSIT)'s call for evidence on Data Intermediaries: Data intermediaries: government response - GOV.UK.
Finally, stakeholders identified the potential for Digital ID technology to unlock issues with consent and data sharing in Smart Data schemes. They pointed to the potential for Digital ID to be used as an authentication layer for data sharing in conjunction with consent dashboards or data intermediaries to support consumer trust when sharing their data.
Accreditation
Along with robust consent mechanisms, our interviews identified the importance of a clear accreditation process, which ensures reliability by subjecting participants to rigorous technical conformance and security testing, financial health checks, and governance assessments, in supporting consumer trust and responsible innovation in Smart Data schemes. Accreditation ensures that businesses participating in Smart Data schemes can be confident in sharing data with third parties and users and allows consumers to feel confident in how their data is being handled. Stakeholders highlighted that the risk for data holders and consumers participating in Smart Data schemes would be mitigated if all participants and parts in a Smart Data scheme’s mechanism are accredited.
Some noted that consistency in accreditation across sectors would support the development of cross sector Smart Data schemes and encourage innovation, as participants in schemes would not be required to seek out further accreditation to offer additional services if they chose to expand their service offering to include data from wider sectors.
Incentivising Data Holders
A key hurdle we heard about in our interviews is that when participation in Smart Data schemes is mandated, the burden of compliance and the cost of participation falls on the data holders. Data holders own the risk of sharing data with third parties within a scheme and are responsible for providing redress when issues arise. Similarly, participation in a scheme requires data holders to invest in their data sharing capabilities, and to prepare consumers’ data to be shared with third parties. Stakeholders warned that when participation in Smart Data schemes is made mandatory for data holders, they may view participation as a 'tick box' exercise which limits their incentive to innovate within a scheme.
Stakeholders highlighted the challenge with designing a scheme with clear incentives for data holders and diverged on whether participation should be mandated or not. Some suggested that mandatory participation in schemes would guarantee that innovators would gain access to the data they need to develop new products and services. However, others warned that this could lead to a high compliance burden both in regulating the scheme and for the data holders themselves.
Outside mandating participation, stakeholders presented a range of views on how data holders could be better incentivised to participate in Smart Data schemes. It was suggested that secondary legislation could offer incentives to data holders, adding to the value they would gain from participating. Some considered that incentives could arise through building larger cross sector schemes, that would allow data holders to access data from other sectors to develop new innovative products themselves. Others raised the view that, on condition of consumer consent, data holders should be able to sell their data to ATPs, creating a direct revenue stream from participating in schemes. Finally, some suggested that reciprocity should be built into the standards for Smart Data schemes by only allowing ATPs entry into a scheme if they are able to provide data themselves, ensuring both data holders and ATPs can benefit from the data sharing agreement. However, such requirements carry the attendant risk of reducing overall competition and creating high barriers to entry for new, smaller players who may not yet have their own data to trade.
Cross-sector Regulatory Collaboration
We heard from several stakeholders that regulators will play an important role in facilitating cross sector Smart Data schemes and that regulatory collaboration is key to unlocking their value.
Some stakeholders discussed the role of regulators in supporting consumers' use of Smart Data schemes, specifically in providing clarity over the redress mechanisms consumers should follow if they encounter harm. Cross regulatory collaboration and clear messaging on the lead regulator for cross sector Smart Data schemes would help consumers understand who to approach for advice. Similarly, stakeholders pointed to the benefits of clear messaging between regulators for innovators, as clarity over the roles of each regulator helps prevent confusion in compliance and therefore encourages innovation.
Another pointed to how regulatory collaboration would help mitigate issues with ensuring interoperability. If regulators play a role in setting the standards within sectoral Smart Data schemes, collaboration between regulators to bring consistency between these standards will help support interoperability between future cross-sector schemes.
In addition to providing clarity to consumers and industry through cross regulatory cooperation, stakeholders pointed to the value that cross-sector sandboxes can offer for innovators developing schemes. They highlighted how sandboxes can provide a safe space for innovation and how it would be useful for regulators to provide access to synthetic data to test use cases. Stakeholders pointed to the value of sandboxes specifically in generating cross sector use cases as sandboxes can bring industries together and provide access to data from multiple sectors, fostering innovation and creative use of data.
The research findings presented in this article are the work of British Academy Research Fellows seconded into the DRCF for 2025/26. These findings do not represent the views of any of the DRCF member regulators and should not be interpreted as such. They do not represent a statement or indication of the DRCF members' regulatory policies.
