Thought Leadership

Unlocking growth: the UK’s journey from open banking to a smart data economy

26 April 2024

Celebrating milestones is always an occasion for reflection and recognition of progress made. As we marked the 10th anniversary of the Competition and Markets Authority (CMA) and the 6th anniversary of open banking, it’s evident that the UK’s financial landscape has evolved dramatically, with the UK at the forefront of innovation, competition and consumer choice.

Open Banking Limited (OBL) was created by the CMA to bring competition to the market, aiming to deliver more benefits to consumers and small businesses. And indeed, it has succeeded. While progress has taken a steady pace, the journey towards building a robust, inclusive, and sustainable smart data economy is well underway, with open banking laying down strong foundations for future schemes, growth, and societal benefits.

Our latest statistics underscore the impressive momentum of the open banking revolution. In March alone, the volume of API calls surged by 10.6%, with small businesses and consumers increasingly embracing smart data solutions. The number of payments processed saw a remarkable uptick of 15.5%, reflecting growing trust and adoption among users.

There were over 9 million active users of open banking in January, which grew to 9.48 million in March. First-time users exceeded 1 million a month, with 1.33 million new users in January and 1.39 million in March.

Marion King, OBL Trustee

Notably, HMRC’s collection of £3.5 billion in tax payments showcases the tangible impact of open banking, with a 16% increase from the previous year and a nearly 40% surge in transaction value.

Moreover, on the global stage, the UK maintains a substantial lead in open banking adoption, outpacing countries like Italy, France, Spain, and Germany by nearly five times. This international recognition was further solidified when Apple™* chose the UK as the inaugural country for integrating open banking with Apple Pay™, underscoring the UK’s pioneering role in shaping the future of financial services.

The recent release of the Smart Data Council’s Roadmap marks a significant step forward, extending the reach of smart data schemes beyond banking into sectors like telecoms, fuel, energy, pensions, and mortgages. This strategic move builds upon the success of open banking, unlocking new opportunities for innovation and economic growth that will benefit consumers, businesses, and the broader UK economy.

Central to this future are the Joint Regulatory Oversight Committee’s (JROC’s) recommendations for a Future Entity that is built on a commercially sustainable model. This entity will play a pivotal role in leading the way to deliver interoperability, inclusivity, competition, and potentially innovation across smart data schemes, ensuring a level playing field for all stakeholders.

As OBL Trustee, I welcome the clarity provided by JROC’s call for views on the design of the future entity, setting the stage for continued collaboration and investment in our world-leading ecosystem. It is imperative that we seize this opportunity to define the future of open banking in the UK, leveraging the collective expertise and insights of OBL and industry stakeholders.

The next stage in our journey includes the establishment of an interim entity to address non-CMA Order initiatives, alongside OBL’s ongoing efforts to maintain existing standards, continue to monitor performance, and promote innovation and develop the ecosystem further. This period of parallel-running will eventually lead to the long-term regulatory framework and the eventual transition to the future entity, ensuring the continued evolution of open banking and its extension into open finance and potentially beyond.

Crucially, this progress is made possible by the dedication and collaboration of government, regulators, policymakers, innovators, industry groups, and stakeholders, all committed to realising the vision of a data-driven economy that serves the public interest.

Open finance is the natural evolution of open banking, and it should, as with open banking, have the public good at its heart. By staying true to our principles of collaboration, transparency, and innovation, we can unlock the full potential of smart data, delivering lasting benefits to all sectors of society.

As we celebrate past achievements and embrace future challenges, I’m confident that together, we will continue to drive significant progress, shaping a financial services ecosystem that not only benefits individuals and businesses but also propels the UK towards sustained growth and innovation.

*Apple and Apple Pay are trademarks of Apple Inc., registered in the US and other countries and regions.