The Open Banking Implementation Entity (OBIE), the body set up by the Competition and Markets Authority (CMA) to deliver open banking in the UK, earlier this week announced that over two million customers are now using open banking-enabled products. This represents a significant upswing in the use of innovative banking technology despite the disruptive effects of the COVID-19 pandemic.
OBIE figures show open banking user numbers have doubled since January 2020. There has been a steady increase at a rate of around 160,000 users per month, which only plateaued in April and May when lockdown measures in the UK were introduced before the strong growth resumed.
Research sponsored by Nesta Challenges’ Open Up 2020 Challenge, shows a sharp increase in the use of money management apps during the pandemic, of which 45 per cent were 25-34-year-olds. According to the survey of 2,000 UK adults in early July 2020, one in five started using online banking apps during the lockdown and 54 per cent now use them regularly.
Imran Gulamhuseinwala OBE, Implementation Trustee, The Open Banking Implementation Entity (OBIE) said: “Open Banking used to be the best-kept secret in financial services. With 2 million active monthly users and growing strongly that is clearly no longer the case. We can now see that people want to exercise their rights over their data and will do so, as long as you make it simple and secure. Open banking enabled products are rebalancing the market in favour of consumers and small businesses. Users are now able to engage more with their finances and getting access to better products.”
The vast majority of users are currently utilising open banking to better understand their bank accounts – how they are spending their money, how they can save more effectively, how they can access tools to help them manage their income and expenditure, reduce charges for borrowing, and improve their credit rating to apply for cheaper loans and mortgages.
This coincides with the Government’s launch of its National Data Strategy and publication of its response to the Smart Data Review, which recognised open banking as a leading example in the area of Smart Data and the benefits it can offer to citizens and small businesses.
Open banking payments (which allow users to make payments conveniently and securely from their bank accounts) are expected to drive growth in the future particularly, as open banking enabled payments providers take advantage of increased functionality coming online to bring innovative payment products to the market.
David Beardmore, Ecosystem Development Director, the Open Banking Implementation Entity (OBIE): “I’m excited to see the 2 million users threshold passed so quickly. 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.”
Bill Roberts, Heading of Open Banking at CMA, said: “When the CMA investigated retail banking, we found banks were not working hard enough for consumers, and so we required them to give people control of their own data. By doing so, we believed this would unleash a wave of innovation and stimulate rivalry. The fast growth in personal customers and small businesses using Open Banking during 2020 – and hitting the 2 million mark – is another important milestone towards that goal.”
Brian Hanrahan, Chief Commercial Officer at Account-2-Account provider Nuapay, added; “Open Banking hit the one million customer milestone within the UK at the New Year. To have hit the two million customer milestone only months later is testimony to the value that this technology is adding to our banking and payment ecosystems. Awareness of the technology’s advantages is not yet ubiquitous, and the industry needs to deploy its collective power to bring the benefits of services enabled by Open Banking to ever more consumers. However, with adoption continuing to increase apace – accelerated by the Covid-19 pandemic – even greater payments and banking capabilities are on the horizon.”
Open banking can be used in multiple ways to help users access their banking data and better manage their finances from access to credit and debt management to applying for mortgages and better multi-account visibility.