Open banking take-up grows by a third

The use of open banking services in the UK has increased by a third in the past 12 months as it becomes “part of everyday life”, according to an industry authority.

There were over 15 million users of open banking services in July, which was 34% higher than the same month last year, according to figures from Open Banking Limited.

These users made almost 30 million open banking-based payments in July, which was over 8% higher than last year. Meanwhile, open banking services as a whole were used over two billion times during the month.

Open banking enables consumers to share their banking details with third-party apps and websites, through application programming interfaces (APIs), if permission is granted.

In 2018, UK banks were required to implement the Competition and Markets Authority’s open banking regulation, which led to the development of APIs in banking to give consumers more control over their accounts.

The end goal was to increase competition in a sector dominated by big financial services companies.

An open banking service to enable variable recurring payments (VRPs) was rolled out in 2023 to give consumers and businesses more control over direct debits.

VRPs not only allow people to vary payment amounts, which direct debits already do, but also let them cap how much is pushed out for any given payment and cap the total amount that is paid out over a certain period.

In July, VRPs accounted for over 4% of all open banking transactions, totalling 4.26 million.

Open Banking Limited said uptake of open banking is spreading across sectors, from HM Revenue & Customs tax payments, to retailers such as Just Eat and Tesco, and airlines such as Ryanair. 

Henk Van Hulle, CEO of Open Banking Limited, said: “This data shows how open banking is now part of everyday life for millions of people and businesses across the UK – from paying taxes to shopping online. It’s fast, secure, and built on trust. 

He added that the organisation is working with government, regulators and the wider ecosystem to ensure “open banking delivers even greater value, innovation and impact for everyone”.

While open banking has seen gradual take-up and the development of a new sector of financial technology (fintech), the next phase of open banking – known as open finance – will go much further. Open finance will see firms share data across more services, such as mortgages and loans, also via APIs, and offer products and services from external organisations.

In February, the UK government began its search for an IT supplier to support its plan to build open banking capabilities into its payment platform.

The Government Digital Service (GDS), which is part of the Cabinet Office, said it wanted a payment service provider “to underpin the Gov.uk Pay platform, specifically for processing credit and debit card payments and pay by bank (open banking) payments”.

The latest government update on the contract, which is worth nearly £50m, said: “Closed opportunity – this means that the contract is currently closed. The buying department may be considering suppliers that have already applied, or no suitable offers were made.”