Julien Eichinger - stock.adobe.c

Open banking surpasses five million UK customers

Upwards of five million people in the UK are using open banking services as the financial sector’s fintech revolution gathers pace

More than five million people in the UK are actively using open banking services, four years after being mandated by the competition regulator.

Data from the nine banks that had to implement open banking show that 500,000 users were added in January.

The Open Banking Implementation Entity (OBIE) said there has been a significant acceleration in take-up. It took 10 months to grow the number of users from one million to two million in 2020, but it has taken just four months to grow from four million to more than five million. “This demonstrates the increasing appetite for consumers and small businesses to use open banking services to move, manage and make the most of their money,” said the OBIE.

Open banking services were made possible by the European Union’s Payment Services Directive 2 (PSD2), which came into effect in 2018.

PSD2 enables third parties to access the customer data held by banks via application programming interfaces – if customer consent is granted – and offer services using this information. For example, a company – with your consent – can take a payment directly from your account without you leaving its website. In the UK, the Open Banking Regulation is its equivalent.

The end goal was to increase competition in a sector dominated by large financial services companies. Back in 2016, the British Banking Association said opening up data from everyday banking transactions had the potential to revolutionise the way consumers and businesses manage their money. “Making more bank data openly available will make it easier for people to shop around for products tailored to their needs and get the best deals,” it said.

Open banking services were most commonly used for payments, with 625,000 more made in January compared with the previous month. A total of 3.86 million payments have been made via open banking.

Read more about PSD2 and open banking

  • The government’s Competition and Markets Authority has requested feedback on proposals to increase competition in the UK banking sector.
  • The Competitions and Markets Authority opens up the banking apps market following an investigation into how to create greater competition in banking.
  • With the EU’s Payment Service Directive going into effect in January 2018, banks have no time to waste in preparing for the changes it will bring.
  • The UK retail banking sector is at the beginning of a journey towards to a more competitive future as new regulation hits them.

Charlotte Crosswell, Trustee of the OBIE, said: “Open banking was predicated on delivering increased competition and providing consumers and small businesses with new and innovative solutions. It is therefore extremely encouraging to see that more than five million active users are now leveraging the benefits of open banking.

“This accelerated growth strongly represents a world-leading and thriving ecosystem bringing an ever-increasing range of real-world solutions, that in turn is driving mass user adoption,” she said.

“As open banking technology embeds and becomes easier to use, we look forward to seeing this momentum continue.”

David Beardmore, ecosystem development director at the OBIE, said open banking is here to stay. “This is positive news for all involved in open banking – for those entrepreneurs who have built fintech businesses based on the foundations of open banking, for the investment community funding the continued expansion of products and services, and for government as it continues to examine how best to extend open banking functionality into other areas of the economy.”

Mastercard’s takeover of Danish fintech Aiia and Visa’s €1.8bn acquisition of Sweden’s open banking fintech Tink provided further signs that open banking is entering a new phase.

Read more on IT for financial services

Data Center
Data Management