UK Open Banking Turns Four with over Four Million Users

January 13 marked the fourth anniversary of the Payments Services Directive 2 (PSD2) which makes open banking a regulatory requirement in the UK. Open banking has changed the way millions of consumers and small businesses control and can benefit from their financial data, as well as supporting the UK’s position as a global innovator in financial services.

Open Banking has been authorized by Competition and Markets Authority (CMA) in January 2018 with the aim of improving customer choice and enhancing competition in the retail banking sector by allowing individuals and businesses to securely share their financial data for their benefit. This work has led Open Banking Implementation Authority (OBIE), who has worked closely with government, regulators, industry, consumers and champions of small and medium businesses to create an open ecosystem of world-leading banking services.

There are now more than 4.5 million regular users of Open Banking – 3.9 million consumers and 600,000 small businesses. In the past 12 months, OBIE has seen a 60% increase in new customers (up from 2.8 million in December 2020). Momentum is also growing, with 1 million new regular/active users added every 6 months.

collaborative effort

Fundamental to the success of Open Banking are the OBIE technical standards and the back-end infrastructure delivery that ensures the performance of Open Banking technology. This, along with collaboration between new and established financial service providers who have developed open banking products and services, has created a thriving ecosystem.

Evidence of continuous innovation, is that at any given time, there are approximately 125 open banking products and services that live with customers within the open banking system.

Open Bank Payments Rise

One area that has seen a significant increase in usage is payments enabled from open banking. Open bank payments allow customers to pay for services or goods in stores or online directly from their accounts instead of using a credit or debit card, as well as creating competition and choice in payment and payment methods. Earlier in 2021, HMRC It became the first government department in the world to allow users to make open bank payments. To date, more than £2.4 billion has been made using this method, which greatly reduces the risk of fraud, customer error when making a payment and also the cost of the transaction – saving taxpayers money.

At the end of 2021, more than 26.6 million open bank payments were made cumulatively. Over 500% increase in 12 months.

Real-world open banking الاستخدام

In addition to the growth of Open Banking Payments, this year OBIE published its second Open Banking Impact Report that shows how open banking-enabled products deliver tangible benefit to customers. Among the key findings of the research is that of those clients who use personal finance management apps, 75% said it helps them maintain capital expenditure and budget (64%). Similarly, 64% claimed that savings apps had increased their total level of savings, providing a financial buffer – this was the first time nearly a quarter of those had ever saved.

The data shows that more than three-quarters (76%) of people say they will or are likely to continue using the services and 90% report that they are easy to use and set up. 83% of respondents indicated that they are interested in expanding their use of open banking services.

2022 will see continued growth of open banking in the UK

OBIE expects increased momentum to adopt open banking in the UK in the coming year, with more government departments adopting it as well. There are other capabilities in financial products that integrate data and payments, and large UK banks implement variable recurring payments, similar to smart direct debit, to move funds between your own accounts (known as “sweeping”).

More consideration is given to future arrangements and governance of open banking, and OBIE will work closely with the CMA and other stakeholders to achieve this.

Charlotte Croswell, OBIE Chair and Secretary said: “The progress the entire industry has made over the past four years to make Open Banking in the UK a success has been astounding. I am proud of the contribution OBIE has made, enabling and supporting ground-breaking financial innovation and cross-sector collaboration. This is to happen without a strong regulatory framework and forward-looking policy makers to support our work.We have set high standards in the UK, and inspired many other markets to follow our lead.

“Ultimately, I am pleased that we are beginning to see how open banking is giving people more control over their money. The pandemic has changed consumer behavior, with increased use of digital and financial services. We continue to see customer growth combined with new and exciting products, and as more is brought to market. Open banking will become increasingly prevalent.This will be key to moving user credentials from more than four million to tens of millions.

“The new OBIE Board of Directors remains committed to strengthening our governance and culture, a key focus as we move open banking to the next stage in its journey.”

  • Polly Jane Harrison

    Polly is a North Wales journalist, content creator and opinion-maker. She has written for a number of publications, usually hovering around the topics of fintech, technology, lifestyle and body positivity.

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