UK open banking users surpass two million with payments projected to drive further growth

By on 01/10/2020
Open banking: about 160,000 new users per month are trying open banking in the UK, according to OBIE. (Photo by William Iven via Pixabay).

More than two million people are now using open banking-enabled products in the UK – a doubling in usage in just over six months, despite the challenges created by the coronavirus pandemic.

Open banking, which aims to boost competition and promote transparency and innovation in financial services, enables bank account holders to share information with third-parties such as fintech companies through real-time data feeds. The UK is seen is a leading country in a developing arena in which countries’ authorities are moving at increasingly divergent speeds.

The Open Banking Implementation Entity (OBIE) announced at the start of 2020 that the number of open banking users in the UK had reached one million. The body – which is responsible for steering open banking’s development – announced on Monday that it has seen a “steady” increase in user numbers since then, at an average rate of about 160,000 new users per month, and the UK has now hit the two million milestone.

Growth “plateaued” during April and May as the UK faced lockdown measures to combat coronavirus but has resumed “strongly”, according to OBIE.  

“Against a backdrop of economic uncertainty, it is exciting to see open banking user adoption remaining resilient and growing so strongly – not least because open banking at its core is about leveraging innovation and competition to rebalance the market in favour of citizens and small businesses,” said OBIE trustee Imran Gulamhuseinwala.

‘People want to exercise their rights of their data’

OBIE was set up by the Competition and Markets Authority (CMA), an independent non-ministerial government department, four years ago. Since January 2018, the nine biggest current account providers in Great Britain and Northern Ireland – known as the ‘CMA9’ – have been required to allow customers to grant third-parties access to banking data.

“These numbers clearly demonstrate that people want to exercise their rights over their data,” said Gulamhuseinwala. “This is consumer-directed financial services in action. Empowered by open banking technology, users can become better informed about their finances and get access to more personalised – and therefore relevant – financial services products.”

OBIE launched an ‘app store’ in June in a bid to help people navigate what it described as a “daunting” market. The number of apps listed has grown from 69 to 83.

Increased payments functionality ‘coming online’

OBIE said on 28 September that payments are expected to drive growth in open banking in the future, as open banking-enabled payments providers “take advantage of increased functionality coming online to bring innovative payment products to the market”.

Speaking in May, Gulamhuseinwala enthused about the potential for payments but also outlined practical challenges that needed to be tackled. He said at the time that payments were “a virtually negligible fraction of users”, with the vast majority being data-related, and that “building out more payments functionality” was a priority.

OBIE’s ecosystem development director, David Beardmore, said: “Open banking will revolutionise the way we pay. While open banking payments are currently a small proportion of open banking usage, recent strong growth is a sure sign that people welcome more payments choice. We predict that payments will eventually form a considerable proportion of our growing user numbers.”

OBIE is funded by Allied Irish Bank, Bank of Ireland, Barclays, Danske, HSBC, Lloyds Banking Group, Nationwide, RBS Group and Santander. Its mandate includes designing the specifications for the APIs that banks and building societies use to securely provide open banking; creating security and messaging standards; and producing guidelines for open banking participants.

Giving citizens ‘power to use their own data’

The UK is, like some other countries, exploring open banking’s potential in enabling more efficient payments for public services.

Nick Down, head of payments at HM Revenue and Customs (HMRC), said recently that departments have been “working closely both individually and collectively” with OBIE – through the Government Banking Service – to “explore the potential strategic and practical benefits” of open banking.

UK digital secretary Oliver Dowden referenced open banking when launching the country’s national data strategy a couple of weeks ago. “For years and years, the big banks were the ones who controlled the use of customers’ personal data. But then the government and businesses rolled out open banking, handing control of that personal data back to customers. They were able to share their data with third parties like start-ups, and shop around for a better deal,” he said.

Dowden went on to say that the government wants to “take the same approach with energy, telecoms, pensions – to give customers the power to use their own data to find a better telephone tariff, and open the doors to disruptors in every part of the marketplace”. Referencing a well-known UK consumer champion, he added: “Data can make us a nation of Martin Lewises, running our own deal-seeking, money-saving operations from the comfort of our own living rooms.”

Global Government Fintech the sister publication of Global Government Forum – reported on 1 September that HM Revenue & Customs (HMRC) had launched a £3m ($3.92m) tender for ‘Payment Initiation and Account Information Services’ – believed to be the country’s first government tender specifically for open banking.

About Ian Hall

Ian is editor of Global Government Fintech a sister publication to Global Government Forum. Ian also writes for media including City AM and #DisruptionBanking. He is former UK director for the pan-European media network Euractiv (2011-2018), editor of Public Affairs News (2007-2011) and news editor of PR Week (2000-2007). He was shortlisted for ‘Editor of the Year’ at the British Society of Magazine Editors (BSME) Awards in 2010. He began his career in Bulgaria at English-language weekly the Sofia Echo. Ian has an MA in Urban and Regional Change in Europe and a BA in Economics, both from Durham University.

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