Demand increases for Open Banking as user numbers grow to more than two million

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The Open Banking Implementation Entity (OBIE), the body set up by the Competition and Markets Authority (CMA) to deliver open banking in the UK, has today announced that over two million customers are now using open banking-enabled products*. This represents a significant upswing in the use of the 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 lockdown and 54 per cent now use them regularly.

Imran Gulamhuseinwala OBE, Trustee of the Open Banking Implementation Entity (OBIE), commented:

“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. These numbers clearly demonstrate that people want to exercise their rights over their data. 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.”

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.”

Dr Bill Roberts, Head of Open Banking at the CMA:

“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.”

Open banking can be used in multiple ways to help users access their banking data and better manage their finances. Examples of this include:

  • Multi account visibility: Personal financial management apps aggregate bank account information, which in turn gives customers spending analysis and support in setting saving goals
  • Access to credit: Giving banks and credit providers access to banking transaction data enables them to make more informed lending decisions, opening a much wider range of borrowing solutions and potential better lending rates for the customer.
  • Debt management: Open Banking allows a customer to provide an immediate and accurate view of their debt picture to a debt advice platform This enables customers to get the best support when they have a debt management problem.
  • Applying for mortgages: Unlocking your financial data both simplifies and speeds-up the mortgage application process without the need to send physical bank statements