New Impact Report sees significant growth in open banking payments and increased business use

30 March 2023

Open Banking Limited (OBL) has today published its latest Open Banking Impact Report showing for the first time how open banking-enabled products are being used by over seven million consumers and small businesses.

There are around 750,000 small to medium-sized enterprises (SMEs) using open banking products. Despite more products being available to consumers, adoption by businesses is higher than consumers with a 16% penetration rate versus 11%. The latest data shows the gap between the two is widening and is largely down to more small businesses using cloud accounting software that uses open banking to import transaction data.

There is a clear difference in consumer and SME use of open banking too. Small business use is dominated by data-driven account information services (AIS) which allow firms to see multiple accounts in one place, providing valuable real-time insights for cash flow and forecasting. This accounts for 79% of business use.

In contrast, this falls to 52% among consumers, who may use these services for money management tools, for example, to help them budget. However, consumers are using more payment initiation services (PIS), which allow them to move money, for example, to top up wallets, or to pay tax or credit card bills.

Other key insights include:

  • We estimate that 10–11% of digitally-enabled consumers and small businesses used open banking during March 2022. This figure has increased from 9-10 % in March 2021.
  • In 2022 there were 68.2m open banking payments, up from 25.2m in 2021. Month-on-month growth is running at around 10%.
  • Key propositions focus on improved financial decision-making, expanded payments choice and better borrowing. 
  • Open banking payments are a significant growth area and are becoming important for retail customers as large companies and major institutions roll out these options. These include tax payments, charity donations, and other account top-ups as well as the settlement of credit card bills and the funding of digital wallets.
  • In December 2022, there were 7.7m open banking payments, and in 2022 as a whole there were 68m payments. This represents growth of significantly more than 100% year-on-year.
  • There are currently 159 fully regulated firms with live open banking-enabled products available to consumers and businesses. This figure has remained broadly flat since March 2022, with three new services launching and five exiting the market.
  • The fully regulated market remains dominated by propositions addressing improved financial decision-making (49), expanded payments choice (45) and better borrowing (27). However, we have seen the emergence of propositions including identity services, charity round-ups, private banking and support with tax calculations.
  • Looking at the products available, the data shows that most providers are targeting both consumers and small businesses (48%), whereas 30% focus exclusively on consumers, and 22% focus on small businesses only.
  • We are also continuing to see an increase in services offered by agents of regulated third-party providers (TPPs). There were 173 such firms with live-to-market services at the end of 2022, an increase of 33 since the end of March 2022. The organisations innovating in this space are typically small start-ups, working with larger TPPs. This provides a quicker and more cost-effective route to market, while supporting greater innovation.

Marion King, Chair and Trustee, OBL, said: “It is encouraging to see a continued and steady increase in the adoption of open banking products and services, particularly by the UK’s small firms which are seeing tangible benefits from real-time business insights offered by open banking data.

“It is also exciting to see the expansion of services in key areas such as borrowing and financial decision-making, empowering people to make better informed choices about managing their money, which is crucial as we face an increased cost of living.”