Insight Type: Article

It’s been exciting to see the increasing speed of open banking adoption in the past six months. Today I’m pleased to share several key successes. 

First, the open banking community made a record 1 billion API calls during May 2022.  

This metric is a key barometer for the level of activity that the open banking industry generates each month. From information calls to payment calls – hitting the 1 billion mark shows the huge rise in activity since the first release of the API specifications in July 2017. 

Secondly, businesses and consumers made 5 million open banking-driven payments throughout May 2022.  It is clear that end-users are choosing to ‘pay by bank’ and take advantage of all the benefits that come with using this fast, frictionless, and secure way to pay.   

With a record 1 billion API calls, 5 million open banking payments, and 6 million active users, it’s clear that open banking is continuing to deliver added value to the UK’s consumers and small businesses.

Six million users and counting 

Finally, it’s taken just under three months for us to reach another milestone – we can now count 6 million active users of open banking in the UK. 

Once again this demonstrates that consumers and small businesses are reaping the rewards of using open banking to keep on top of expenditure and daily budgeting, cut card-processing costs, and shop around for better financial products and services.  

David Beardmore Ecosystem Development Director, OBIE

We’ve already found that 64% of consumers have claimed that using open banking savings apps increased their total level of savings and helped them develop a regular savings habit, while using money management apps improved their understanding of their finances, helping them to feel more in control of their finances. 

And our third Open Banking Impact Report, published later this month, contains unique new research which highlights how open banking-driven cloud accounting services are helping small businesses make better financial decisions, become more efficient, and collaborate more effectively with their accountants.   

It’s clear that open banking is continuing to deliver added value to consumers and small businesses in the UK, and our first-class open banking standard and ecosystem continue to lead the way in the uptake of this pioneering technology. 


The UK’s energy sector is under unprecedented pressure – the increasing cost of wholesale gas and power (with further price cap increases expected in October 2022), a string of supplier bankruptcies, combined with post-pandemic debt challenges for many customers – have produced a perfect storm of challenges for energy companies and consumers alike.  

While there is no silver bullet to remedy this series of complex problems, it does provide further impetus for energy companies to explore – and expedite the development of – smarter solutions which lower the cost-to-serve. Hence the rise in open banking payment solutions (bank-to-bank transfer).

Cost savings and cheaper ways to pay

The opportunities are two-fold: offering domestic customers a new, real-time, secure and convenient way to pay, and significant direct and indirect cost savings for energy retailers. This includes a more cost-effective alternative to Direct Debits.

We spoke to Siemens, which has collaborated with payment solutions provider Ordo, and systems integrator CGI, to offer open banking technology as a payment option within its Managed Credit solution.

Siemens Managed Credit

“Managed Credit was developed as a way for energy suppliers to manage credit risk more effectively and offer a lower cost-to-serve, while providing end customers with a more intuitive customer experience,” comments Nick Jones, Head of Managed Credit, Siemens.

“In addition to traditional online and cash payment methods, it offers suppliers access to Ordo’s bank-to-bank transfer platform, removing costly commission charges.  This means suppliers can offer Managed Credit as a cost-effective payment option, which is cheaper than Direct Debit.”

Open banking allows businesses to securely request payments from their customers in real-time, via direct bank-to-bank transfer. This eliminates payment card and reconciliation fees on every transaction, generating significant savings.

Managed Credit also offers an alternative to typical credit and prepayment arrangements. It helps energy retailers tackle the problem of costly pre-paid meters, which are traditionally more expensive – and time-consuming – to run for both energy retailers and their customers.

Retailers benefit from commission-free transactions

For an energy supplier managing a significant volume of payment transactions each year, this removes the standard 1% commission fee typically associated with payment transactions This is a major saving when pre-payment energy customers alone carry out approximately £4 billion-worth of transactions each year.

It also gives retailers an opportunity to offer their domestic customers a more compelling alternative to traditional pay-as-you-go (PAYG), Direct Debit and pay-on-bill arrangements, particularly for digitally-connected consumers.

Managed Credit works by running smart meters in credit mode (but managed as if they were operating in prepay mode) while maintaining a central payment wallet via a smartphone or website.

Benefits for consumers

The wallet lets customers manage their gas and electricity in a single energy account and by topping up a single wallet, they make up to 50% fewer top-ups than with individual smart gas and electricity meters operating in pre-pay mode. It also gives customers greater insight into their energy charges and payments, helping them to take control of their bill, and reducing reliance on customer services.

As competition intensifies and wholesale energy prices continue to rise, energy suppliers will look for new ways to lower their cost-to-serve, manage bad debt risk and opportunities to significantly improve customer experience.

Variable Recurring Payments set to take off

One of these opportunities is presented by Variable Recurring Payments (VRPs), a new open banking technology which lets customers safely authorise FCA-regulated payment providers, like Ordo, to make repeated payments on their behalf. The payments must sit within a mandate agreed by the customer and a business, such as an energy supplier.

Fliss Berridge, co-founder at Ordo, explains. “Open banking will make VRPs – repeated payments like monthly utility bills – much smarter, more convenient and efficient. A ‘smart Direct Debit’ if you like.

“VRPs can be set up in minutes rather than weeks, and payment mandate parameters can be changed dynamically, right up to the point of irrevocable payment, meaning businesses and consumers can respond to life events in real time. Payment transfers are also in real time, without long processes and paperwork. Once open banking is used for our regular bills, we’ll wonder how we ever got by waiting.”

Fliss expects companies to start to integrate VRPs in the second half of 2022. She suggests keeping an eye on those businesses which have made a head start on implementing this technology as they begin to deliver the flexibility, improved customer experience and further cost savings it offers.


Notes to editors

You can download Siemens’ Managed Credit technical whitepaper, which presents OFGEM data alongside the cost savings of bank-to-bank transfer compared to other available payment methods.

The Open Banking Implementation Entity does not endorse any of the products or companies mentioned here.

If you would like to share your organisation’s experience of open banking, please email us at marketing@openbanking.org.uk

If you would like to talk to one of our team about how open banking could help your business, please email us at enquiries@openbanking.org.uk.

People paying for plumbing supplies at Williams plumbers' merchants

Around 600,000 of the UK’s small and medium sized enterprises (SMEs) are currently using open banking technology to benefit their business in some way.  One of those SMEs is plumbers’ merchant, Williams.

Founded in 1972, Williams is a national organisation offering same-day, every day delivery of plumbing and heating supplies to two-thirds of the UK. It has 43 trade counters and regional fulfilment centres across the South East, Manchester, Milton Keynes, and Bristol.

It is a trade-only operation (it does not sell to retail buyers) and the company’s customer base is largely made up of what it calls the ‘one-to-five’ – that is, sole traders, and very small independent plumbing companies employing up to five people.

The company launched its open banking payment scheme – courtesy of PayitTM by NatWest – back in March 2021. We asked Mike Mann, Williams’ Finance Director, to share his company’s open banking journey.

NatWest Payit logo

Rising card costs

Mann explained that the company started looking at open banking payment solutions in late 2020, as it explored ways to cut the cost of card fees.

He said: “Our card processing costs had grown out of all proportion with our sales revenue. I think we had four price rises in three years. And they weren’t inflationary price rises. Changes made to the cap on certain card fees meant that we went from a capped £1.50 card charge on quite a large transaction, to a £5 charge, or an unlimited charge. 

“So while that didn’t look terribly onerous on the rate card, when we worked out what proportion of our customers used that type of card, it was ridiculous. It got to the point where our card processing costs were 10% of our pre-tax profit.”

As an existing NatWest customer, the bank approached Williams to discuss Payit. The solution offers a new way to collect and send payments online and in person, removing the need for sharing and storing card details.

As part of its research, Williams spoke to PayByLink in the Netherlands, which provides the retailer with an email and SMS payment link delivery service, to better understand how open banking worked. The PayByLink team pointed out that 70% of remote transactions in the Netherlands were done by real-time inter-bank payments (not via cards) and that it was the norm there.

Cheaper, quicker and contactless

Mann continued: “When we started to look at it, we realised there were other advantages. This could have a significant cash flow impact on us because it’s instant settlement, not ‘day plus three’, or whatever your deal is with your payment service provider (PSP). It was obviously much cheaper on a transaction basis, and in a classic case of good timing [as the pandemic hit], it was also contactless.”

That was all the encouragement that Williams needed, and the company rolled out open banking for remote payments and in its branches in March 2021 and on its new website in June 2021.

Although the original plan was to use Payit purely as an alternative to online card payments for the credit control team (which accounts for only a part of Williams’ transactions), Mann quickly realised that the option had the potential to be used in-branch.

The branch staff were enthusiastic about Payit and found it a good way to engage customers, offering a short demonstration of the solution in action. The company also promotes use of the alternative payment option by way of a prize draw.  

Prize draw promotions

Mann explained how this works. “We initially offered our customers the chance to win a weekly prize of a top-end barbeque, but for the winter season we asked PayByLink to develop a bit of prize draw functionality so that in the branch, once our customer completes their payment via Payit, they get a confirmation text immediately afterwards like normal and then a moment after that, a text saying, ‘Hooray you’ve won a £50 tool voucher, what do you want to spend it on?’”

He added: “Doing something like that is actually cost-effective for us, because if it’s a one-in-twenty chance of winning, Williams is still saving money every time somebody uses Payit.”

The vast majority of customers who try it, continue to use Payit, although some customers still prefer more traditional payment methods, such as cheques, and Williams continues to provide a range of payment options.

Additional security

Other advantages, both for Williams and for its customers, include reliability and security.

Mann explains: “As the card industry increases its security, we’re finding more card transactions are rejected on the grounds that, when it’s run through the card issuer’s fraud checks, they believe it’s fraudulent – even when it’s not.

“If customers have had trouble using a card on our website, or paying a monthly account, we’ll just say, ‘Use Payit’, because as long as you have the money in the account it can’t decline it.’”

The merchant also pointed out that using Payit also helped overcome some of the security problems surrounding card fraud. Mann said: “In the days when we were doing card-holder-not-present transactions, every time somebody scammed a card, we were getting hit for the cost of the sale. There is still a residual risk in entering card details online, and Payit removes this security issue.”

Educating its customer base about the additional security benefits of taking card payments by a link-based method has given customers confidence in open banking payments generally. It also offers a smoother customer journey.

Although take-up hasn’t been as fast as the company would like, Mann believes that as the number of similar apps on the market increases, that will grow.

Low-cost, low-impact integration

Making the decision to introduce Payit was an easy one for Williams. The company benefited from minimal integration costs from both NatWest and PayByLink, which recognised the value of adding Payit to its long list of available payment methods, and Mann pointed out that, as it is not a high-cost, high-impact process, the risk of introducing a payment solution like this is minimal.

He concluded: “My question to any merchant, or anybody, looking at this is, ‘Why on earth wouldn’t you?’ If this takes off quickly, you will be glad that you were in there early and you understand the way it works, and how it can benefit you.

“And if it takes off slowly, you haven’t spent a lot of money implementing it. Somebody else has done all the really hard work.”

And if companies are prepared to incentivise their customers to try this new way to pay, Mann sees no reason why they shouldn’t reap some of the benefits too.


The Open Banking Implementation Entity does not endorse any of the products or companies mentioned here.

If you would like to share your organisation’s experience of open banking, please contact us at marketing@openbanking.org.uk.  

If you would like to talk to one of our team about how open banking could help your business, please email us at enquiries@openbanking.org.uk.

Pledjar describes itself as the charity collection tin of the 21st century, and its premise is simple. It is a digital spare change collection box that drives donations by rounding up small amounts from daily purchases and securely passing them on to charity automatically.

Pledjar logo

As the use of cash continues to decline, it is keeping alive the spirit and principle of giving spare change to charities.

Working with the Charities Aid Foundation, Pledjar supports more than 150 charities worldwide, from big tier one organisations such as Oxfam, Cancer Research UK and Save the Children, through to smaller charities like Sufra based in North-West London and the Lady Fatemah Trust in Buckinghamshire. 

Through open banking technology, Pledjar offers multiple ways for users to donate and can track and show the total of their charitable giving in their own personal ‘jar’.

The most popular service sees the app having visibility of a user’s bank account transactions, rounding up their spends and donating the surplus to their chosen charity. This means for example, for a £15.54 spend at the supermarket, £0.46 could be donated. 

While the micro-donations are small, they soon add up over the course of a few weeks or months and suddenly £20 is donated, which is enough to feed an orphan in a developing country for a month or to buy enough hockey sticks for a team of disabled young people.

Following its launch in 2020,  Pledjar conducted extensive user research wanting to ensure it spoke to the needs and concerns of donors. From this, the organisation has implemented more flexibility, control and transparency for users of its platform and how they choose to donate. These include:  

Benefits for charities

Pledjar can support most charities. This makes it even easier for users to discover new or lesser-known organisations, and to start donating straightaway.

Another benefit of the Pledjar app, which is FCA-authorised, is that there are no hidden fees. Pledjar simply takes 10% of what was raised using its platform, which crucially doesn’t include the Gift Aid amount – and that’s it. If there are no donations, there are no fees. There are no set-up costs, additional costs to donors or minimum fees for hosting.

Setting up is really quick and simple too. The easy two-step process which is completed via Docusign means signing a fundraising agreement and filling out a form for compliance and due diligence can be done in as little as 10 minutes.

"It’s important charities don’t get left behind and miss out on the millions of pounds of donations in spare change." Mujtaba Jaffer, CEO, Pledjar

Disclaimer: The content of this article is based on a discussion with Pledjar and the Open Banking Implementation Entity (OBIE) to enable Pledjar to provide details relating its service offering for information purposes only. For more information on the use of our website see: https://www.openbanking.org.uk/terms-conditions/

If you are a third party provider (TPP) and you would like to share your open banking story with us, please email us at marketing@openbanking.org.uk.

The Wonderful Organisation started life in 2016 with a simple aim – to change the face of the UK’s charitable giving platforms by enabling 100% fee-free fundraising and to reach as many charitable organisations as possible.

However, although the team negotiated reduced card processing fees, as the Wonderful platform gained traction, it saw its growth and ability to reach more organisations and donors stunted. More income simply meant more expense.

But open banking changed that.

By implementing open banking and its account-to-account (A2A) payments, Wonderful instantly stopped incurring card processing costs, enabling the non-profit to continue its growth unimpeded.  The organisation:

Kieron James, CEO of Wonderful, only sees the upsides for charities when it comes to open banking. He advised: “We would urge charities to embrace the technology and get on board now, while it’s still fairly nascent.”

Wonderful has two arms: Wonderful Payments (a real-time donation processing service) and Wonderful Organisation (the fundraising platform focused on events). In both cases, donors make payments directly from their bank account to their chosen charity’s account – in full.

Open banking appeals to donors because it can both help reduce friction on payments, and minimise security risks.

Donor and fundraisers enjoy complete confidence that the total amount of cash raised or given will go, in its entirety, to the great cause they support.

Fundraisers prefer fee-free charities

Wonderful has also seen a drive from fundraisers expressing a strong preference to work with charities that don’t use an intermediary with processing fees. They want to see all their money raised to benefit the intended organisation.

On the open banking evolution, James said: “There is real power in the third sector. Charities can help increase confidence and familiarity with open banking because, if their A2A payment is a donation, people may be more inclined to trust a bank-to-charity connection than a bank-to-ecommerce one. It all helps.

“If we can get to point that all UK charities are getting 100% of their donations with easy open banking technology, wouldn’t that be genuinely wonderful?”

Find out more in our ebook, ‘The charities guide to growth through open banking’.


Disclaimer: Content is based on a discussion with the Wonderful Organisation and the Open Banking Implementation Entity (OBIE) to enable Wonderful to provide details relating its service offering for information purposes only. For more information on the use of our website see https://www.openbanking.org.uk/terms-conditions/

If you are a third party provider (TPP) and you would like to share your open banking story with us, please email us at marketing@openbanking.org.uk.

JustGiving is one of the world’s most well-known and trusted platforms for online giving. It helps people raise money for the charities and people they care about.

Since its launch in 2000, the platform has helped raise over £4.4bn for a variety of causes across the world.

A merchant of record, JustGiving works by processing a donation and aggregating funds to a recipient charity registered with the platform.

Before the advent of open banking, the majority of payments made via JustGiving were attributed to either PayPal, or a credit or debit card.

Today it is very much a mobile-first platform, with more than 85% of its donations made using a mobile phone or tablet.

And while 45% of traffic comes via traditional card payments, all other donations are made through digital wallets such as PayPal, Google or Apple Pay and now, crucially, open banking.

The cost of processing payments

In the past couple of years, JustGiving’s business model has changed radically. It is now run as a freemium platform, meaning when someone makes a donation, they are prompted to give a tip which goes directly towards the running of the service.

This ensures all donated funds go straight to the charity or cause, but comes at a cost risk to the platform.

And, like any merchant, JustGiving faces many challenges. These range from the cost of processing these payments, to cash flow and the ability to receive funds in a timely fashion (it still takes between three and four days), to the challenge of card fraud, and charge-back costs.

The open banking journey

Working with American Express’s Pay with Bank Transfer service, JustGiving began using open banking in Christmas 2019 and was the first merchant in the UK to use the technology.

Today open banking represents between 7%-8% of JustGiving’s share of wallet and its benefits are open to any organisation that chooses to use the platform for their charity. Oliver Shaw-Latimer, JustGiving’s Director of Global Fintech, said: “It is like open banking was made for charities.”

The benefits also help tackle a long list of historic challenges.

As money is pushed directly from a donor’s bank account, there is never an issue with insufficient funds. If the cash isn’t there, the payment can’t be made.

And when it comes to cashflow, it’s all taking place in real-time, at the same speed as if you were pushing through your banking app.

With no middleman, JustGiving is now seeing savings of 50%, as well as the displacement of more expensive payment options, such as mobile wallets.

Increased donations via open banking

Shaw-Latimer said: “The average transaction value is almost twice the amount of a regular donation. We feel it’s an indicator people will choose the open banking option when making large donations, for security and fraud reasons.

We underline open banking as our preferred method. It’s quicker and cheaper, it’s mobile-centric, and the flow is smooth. Ultimately, once you’ve picked your bank, you’re set.”

And JustGiving believes the sector can play a role in the wider adoption of open banking payments among consumers.

Shaw-Latimer said: “Open banking is a seismic change in payments, and it’s particularly applicable to the not-for-profit sector. Charities are always looking to reduce fraud and get money sooner. It’s almost like it’s been designed for them.

“And I think it will follow a similar trajectory to contactless. JustGiving is viewed as the R&D department of the sector so often leads the way. Once adopted, charities will start to pick it up.

“It’s recently been adopted by HMRC too, which indicates that adoption is going up and more people will be using it in the next 12 months. In addition, usage seems to suggest the open banking-enabled payments also lead to higher donations.”

For JustGiving, the future is very much about expanding open banking options, including plans to make it available to personal crowdfunding pages, and rolling it out to support charities across Europe.


Disclaimer: The content of this article is based on a discussion with JustGiving and the Open Banking Implementation Entity (OBIE) to enable JustGiving to provide details relating its service offering for information purposes only. For more information on the use of our website see: https://www.openbanking.org.uk/terms-conditions/.

If you are a third party provider (TPP) and you would like to share your open banking story with us, please email marketing@openbanking.org.uk.

Ecospend is a financial data and payments platform which won the tender to supply HMRC – one of the biggest open banking initiatives ever launched – in March 2021.

With the January 2022 self-assessment tax deadline just gone, David Beardmore, OBIE’s Ecosystem Director, caught up with James Hickman, Ecospend’s Chief Commercial Officer, to ask how tax season was going. We summarise the conversation below and you can watch the complete video here.

David Beardmore (DB): We’ve just passed the end of January, the deadline for self-assessments, and obviously it’s the busiest time of the year for paying tax bills. So I was keen to hear how things have progressed since we were chatting back in November at Open Banking Expo. How’s it been?

James Hickman (JH): January 2022 was our first real test, because this was the first self-assessment peak.

Both our systems and our technology delivered well, so hats off to our tech guys. I think we’ve now passed around £4 billion in payments. We also had one day in which we delivered over £200 million in payments.

We have introduced nearly one million first-time users to open banking in the past couple of months too.  

Executing a ‘pay by bank account’ process successfully, and this is successful, not just for us, but the whole ecosystem, because ultimately they are transactions that have migrated away from cards and have been executed by customers, using an open banking Application Programming Interface (API).

DB: Those numbers are staggering. It’s a real credit to the team at HMRC for being adventurous and taking it to this level.

But there’s some other real benefits to HMRC too. HMRC sees open banking as really useful in terms of how it receives payments from individuals and small businesses.

JH: Absolutely, you’re leveraging the fact that 80% of our population now have a smartphone and a banking app on their smartphone.

You’re effectively removing the need for a piece of plastic with a 16-digit card number and initiating a single API calling another single API, so it’s a very quick, aggregated journey.

This is not only quicker, and more secure – it removes the risk of chargeback fraud. This might be less interesting for the government, but it certainly saves on fees.

The other thing, of course, which is relevant to HMRC, is around reconciliation.

I know HMRC has issues with suspense accounts and payments coming through which are not easy to allocate because the reference or Unique Taxpayer Reference (UTR) numbers aren’t input correctly. With an open banking journey there’s little room for error. There’s no manual entry required.

James Hickman, Chief Commercial Officer, Ecospend

And it’s fair to say that we have seen 100% reconciliation, in that all the payments we’ve helped to initiate have ended up in the right account. So it’s easy to imagine the benefits of that alone in terms of efficiency and cost savings around not having to repatriate money that then can’t be released to the public purse.

It’s also about giving customers more choice, giving them an option where they don’t have to share card details.

DB: One thing I wanted to pick up was the decoupled journey. Can you explain what that is and how you see it being used for paying tax bills?

JH: Absolutely. One of the things we realised, is that, obviously, an open banking payment journey works far better when initiated through a smartphone because you’re typically using your biometric ID.

That said, people like to complete their tax returns on a computer, not on a phone and so again, hats off to HMRC. They just use the ‘decoupled journey’.

This allows the customer to start or complete their tax return on their desktop, start the payment journey on their desktop, scan a QR code on the desktop then complete the payment journey, via their smartphone using their biometric ID.

It’s the perfect bridge between a desktop experience and a mobile-centric payment journey.

DB:  I want to finish with something that many of us saw in the press when a prominent banker suggested that open banking hasn’t been a success. I’m guessing that you might have a different view.

JH: I think the numbers talk for themselves on this. It’s worth reminding ourselves that this is a very nascent technology.

Things always take many years before they reach that level of ubiquity.

As a recap, we’ve been in the market now for just over a year, our first project was to launch our program with HMRC. We’ve also got a number of private sector clients, large blue-chip organisations using our services, as I know many of our great competitors have as well, but for Ecospend it’s numbers. To recap – over £44 billion has been transacted.

A couple of million new people – both businesses and consumers – were introduced to this solution over the last 12 months.

These are records that keep tumbling, and I’m sure the growth will only increase. If I was a challenger bank, I would be more than happy with those figures less than 12 months from launch.

And it’s worth pointing out that we launched our HMRC program in the middle of a pandemic – we did the whole thing on Microsoft teams.

So we have also been operating in challenging conditions, so I would probably say to that prominent banker look at the numbers and let’s keep pushing it. This is just the start. We are still only scratching the surface.

And one final point to note is that the UK is significantly ahead of the rest of the world with this technology – a global leader – and it’s important that we try to maintain that position!


If you would like to share your organisation’s experience of open banking, please email us at marketing@openbanking.org.uk

If you would like to talk to one of our team about how open banking could help your business, please email us at enquiries@openbanking.org.uk.

In 2021 we witnessed significant growth in the adoption of open banking. We saw more participants, more end users, and certainly lots more publicity about the benefits it can bring.

But what will 2022 bring? We asked a few experts from across the open banking ecosystem to give us their predictions for what we believe will be another important year.

We share their thoughts below.

What will take open banking to its full potential in 2022?


HMRC team

“Effective collaboration to turn open banking data into services that are good to use and offer real value to customers and businesses. HMRC wants to be a big part of that, and we will be inviting interest in a number of open banking-related proofs of concept, such as splitting VAT at source.

Following the success of implementing payment initiation services, HMRC is also looking to maximise the benefits of open banking by exploring the application of account information services. We are keen to continue engagement with the OBIE, Pay.UK and the Bank of England to explore how we can further align our strategic activities.”

Oliver Shaw-Latimer, Head of Global Fintech, JustGiving

“From our perspective, it’s VRPs. It’s huge for us. Replacing Direct Debits eventually would be awesome, because it’s all tech and it’s more flexible – it’s instant payments. And recurrence is huge for the charity sector.

The other one is request-to-pay, which is sending out pre-invoiced requests for payments to our suppliers.

A lot of corporates hand over funds so we can disburse them to a wider network of charities. The ability to send them that ask, and have them respond to that ask via the open banking network kind of closes the loop, without having human steps in the processes. That’s a big one for us as well.”

Francis McGee – Consumer Representative, OBIE

“2022 will be a transitional year. The implementation phase will end, and we need new structures that make sure open banking continues to be done well for consumers, and run well for the ecosystem.  Let’s start 2022 by signing up to five principles to make that happen:

Fliss Berridge, Director and Co-Founder, Ordo

“Open banking has made life easier for businesses and consumers making and collecting single payments. The gap that’s left is to cover VRPs – regular repeated payments like monthly utility bills, and ad hoc repeated payments to the same retailer (in-person or online).

Open banking makes these payments much smarter, more convenient and efficient – a ‘smart Direct Debit’ if you like. VRPs can be set up in minutes rather than weeks, payment mandate parameters can be changed dynamically, right up to the point of irrevocable payment, meaning businesses and consumers can respond to life events in real time. Payment transfers are in real time, without long processes and paperwork.

Once open banking is used for our regular bills, we’ll wonder how we ever got by waiting.“

Hetal Popat, Open Banking Director, HSBC Group

“During 2022 I expect we will see extensions from open banking to wider passporting of data from and between financial institutions. This will unlock enormous value for both consumers and businesses, and will be a pro-competitive force in many other industries outside of financial services.

In parallel, the launch of VRPs will enable entirely new use cases to be fulfilled, embedding payments into wider customer journeys. The industry needs to co-ordinate in order to bring this to market, and the OBIE is well placed to facilitate this.”

Billy Helm, Marketing Executive, Ecospend

“2022 will be about consolidation and sustaining growth. Ecospend’s partnership with HMRC proves that, where there is consumer demand and an intuitive flow, the technology works well at scale. 

For open banking to reach its potential, consumer education will be vital. Also, we need to be realistic that this will not apply, in the short term at least, across every payment setting but will always be part of a mix.

It’s perfect when the consumer has to pay a bill or when fast delivery of a product isn’t a prerequisite. Aligning with the banks will be crucial to broaden the opportunities, especially to ensure industry-wide consistency around the settlement status of payments.”

Paul Lloyd, Co-founder and CMO, Snoop

“We need a broad set of scalable propositions that make people’s lives easier. HMRC’s adoption of open banking is a good example. PensionBee and Plaid partnering to turn a two-week pension contribution process into something instantaneous, while helping people save more easily for retirement is another.

And the work Snoop is doing to help make people better off is another example. With Snoop, every customer gets a unique money management experience based on their open banking data. Hyper-personalisation and the ability to connect people with relevant and personalised money insights at exactly the right time enables the app to be relevant, practical and useful in people’s everyday lives. We’re beginning to see just what a profound impact it can have.

The implementation of VRP will be another huge moment for open banking in the UK. This, combined with the scrapping of 90-day reauthentication, will play a significant part in unlocking open banking’s potential.”

Mark Chidley, Independent SME Representative, OBIE

“As the implementation phase of open banking concludes it is essential that the CMA and its fellow regulators (the Financial Conduct Authority, the Payment Systems Regulator and the Information Commissioner’s Office in particular), orchestrated by government, ensure that:

“We have been encouraged by the CMA’s 5 November open banking update to believe there is every chance that these important outcomes are delivered in the broad interests of the people and small businesses that open banking was always intended to benefit.

“We eagerly await the CMA’s consultation response and wider regulators’ statement in the early part of the new year.”

Nick Levine – Chartered Accountant and Fintech Consultant

“VRPs will play a key role. The benefits of smart overdrafts and intelligent savings are highly compelling and made possible with the introduction of sweeping via VRPs. I expect many people to engage with open banking for the first time through these tools and for trust and confidence to continue to increase.”

As part of our latest Impact Report we conducted additional research from independent research agency Marketing Means. In it, we interviewed a small number of UK consumers, from a range of age groups and income brackets, who shared their experience of using some of the market-leading open banking apps to help them manage and control their personal finances.

For some people, their money management app has proved to be a revelation, giving them a clear and categorised view of their spending over time that is easy to comprehend and action – unlike most bank statements.

Improved money management

They reported that this has improved their understanding of their financial position and helped them feel more in control of their finances. In turn, this has engendered a higher level of confidence in managing their money and financial decision-making.

Some interviewees indicated that this was motivating them to engage more with their finances and manage them more effectively. This is encouraging given that one of the CMA’s stated aims of open banking was to empower customers to engage more effectively with financial and banking services.

Identifying wasteful spending

They also appreciated – and trust – the information they receive about their spending, as well as for most individuals, the pointers to where they can cut wasteful expenditure or find better deals, particularly around product renewals and subscriptions.

Other people reported the benefit of having an enhanced overview of their finances – perhaps using their app to see across multiple current and savings accounts. While these individuals generally had a good understanding of their financial situation, they were looking for a quicker and easier way to see their overall position.

We share some of their insights and observations.

Two houses, all my outgoings, credit cards, and utilities – it lets me see what’s coming up.

Q. What are the best aspects of using a personal financial management (PFM) app that you’ve experienced?

A. “Another good thing is the way it gives me suggestions on where to save money, for example when I’ve wound up having streaming services that duplicate each other. And pointing that out to me, in a really useful way, how much I could save. And I can pin the suggestions, so I can come back to them later.”

A. “The prime benefit is efficiency – cutting down on time and the process required to see all my accounts, and to be able to view and access them in one place.”

A. “It takes away the donkey work of finding new deals. And I always feel in control – they put the offer in front of you, but you decide.”

Q. Was the app easy to use and did it help you understand your finances better?

A.”I really can see my money so much more, through the way it puts it into categories. I’m managing two houses now that my mum’s moved in with me. Being able to see all the expenses in categories allows me to have more control and cuts down on the mistakes I was making before.”

A. “Yes, I’m going completely app-based as much as I can, because online banking through the browser really has become so inconvenient. It really is undermined by so much laborious security.”

A. “It did confirm that we’ve been spending a lot on groceries – £10,000 on Ocado. We used to buy these pizza kits, they’re really nice but at £16 a kit, it soon adds up. We used to order things because we wanted to see what they were like. We’re cutting down on that now. But I think we cut down because of the hit on our income from lockdown, I wouldn’t say it was because of the app. Maybe because I can see it a bit clearer.”

A. “I’m more likely to look at switching deals through the app than on price comparison websites, when it comes to renew. Because the app is more active in sending me suggestions, it will get my attention more.”

I’m more likely to look at switching deals through the app than on comparison websites when it comes to renew.

Q. Will you continue to use and expand your use of open banking services in the long-term?

A. “When I’m out of contract, I will certainly do something about my mobile contract. And I’m not really someone who has switched a lot before, it can be too much bother. But it is encouraging me by showing me what the jump is going to be when I go out of contract. The difference to something like USwitch, when they show me savings it feels more theoretical, will I really make that saving? Whereas the app really does know my spending, so I can trust what it says about how much I’ll save.”

Q. Did the app help you manage your finances?

A. “Two houses, all my outgoings, credit cards, and utilities. It lets me see what’s coming up. I’m now better at managing it all, my old spreadsheets couldn’t cope. Previously I did miss things and then wound up paying overdraft charges.”

A. “Because I can see my money easier and have more control, I feel encouraged to increase my saving, to put more money away.”

Q. Has the app helped improve your financial wellbeing?

A. “That I can get all my accounts in one place, that I can see my spending in categories, that I can assign categories myself, that I can see my spending over time – that is all really motivating me to make my situation better.”

A. “I feel more assured. Because I can see my spending so much easier this way, it feels as though I’m more protected against fraud on my account, because I would see it easily and quickly.”

A. “The app is really relevant to me now, as I’ve gone back to being a student, so with a limited income I have to watch my spending.”

You can read the full report here.

Notes

A total of 4,014 consumers took part in the survey between 25th August and 14th September 2021, of whom 464 claimed to have used any of the nine Third Party Provider (TPP) apps and gave the correct description of its purpose, and went on to form the core sample for this piece of research.

The survey fieldwork approach consisted of two elements. The first and largest was the use of an online consumer panel run by a UK-based provider, which offered an excellent way of contacting a large and broadly representative sample of the UK general public aged 16+, drawn from 450,000 UK panellists. You can find out more about the methodology in the full report.


 

Variable Recurring Payments (or VRPs for short) are a hot topic. They are a form of payment instruction that can be set up and used to make a series of future payments.

At the moment it’s not uncommon to hear VRPs referred to in the same breath as a process known as ‘sweeping’, but VRPs will be used well beyond sweeping as well.

Granted, if you operate outside of the financial services marketplace, the chances are you probably haven’t heard of VRPs or sweeping. However, they are at the heart of a new form of open banking-enabled technology that is set to make life a whole lot easier for small to medium-sized enterprises (SMEs).

SME Think Tank views

In a recent OBIE Think Tank we brought together representatives from across the business landscape to explain how VRPs work, both in the context of sweeping and other propositions that can provide big benefits, and potentially impact, the SME community.

What is a VRP?

A VRP will allow customers to safely connect authorised payments service providers (PISPs) to their bank account. Providers can then make a series of payments on a customer’s behalf within agreed parameters, offering more control and transparency than existing alternatives.

For many consumers and small businesses, the most well-known method of collection for a recurring payment is via Direct Debit or continuous payment authority (CPA) – a type of recurring payment that a merchant makes using their debit or credit card details.

Unlike these two well-known methods of payments, a VRP works by letting customers safely connect authorised PISPs to their bank account so they can make payments on their behalf.

VRPs offer a range of benefits over Direct Direct and card CPA to both the small business making payments and the small business receiving payments, as the table below sets out.

At a glance: Recurring payments

 Direct DebitCPAVRP
TransparencyYou have visibility of the mandate and the last amount taken.You can’t see details, only the transactions that appear on your statement.  Mandate and payment parameters are visible in your banking app.  The payment parameters limit the amount that can be taken and also allow an end date for the mandate to be set.
SecurityInvolves sharing a sort code and account number in an uncontrolled environment.Involves sharing all card details on a debit or credit card.Must set up via a secure consent journey. It has to be online and through your bank.
FlexibilityTakes place on the same day (or nearest working day) every month and if the timing or amount changes, the payee has to be notified in writing (unless waived in terms and conditions).A company is given permission to take funds from your debit or credit card on a flexible basis. A set of parameters is agreed and a flexible payment can be made within those agreed boundaries.  

Why should you care about sweeping?

Sweeping is a particular proposition which can be developed using a VRP to automatically move (or sweep) money from one of their accounts to another of their accounts.

There are many examples of where this could be used, such as sweeping funds from a current account to a savings account, or a current account to a loan account.

And of particular interest to our Think Tank was an industry consultation where the Competition and Markets Authority (CMA) mandated the leading nine retail banks to make VRP functionality available, for free, to any PISP as long as the payment is specifically for the purposes of sweeping.

This means that PISPs can develop solutions for customers to help them run their finances run more effectively, and ultimately make their money work harder.

For example, money can be automatically transferred between accounts, such as moving excess funds into an account where it can generate interest. Alternatively, it could be used to transfer money to repay an overdraft or loan account.

However, we know that the industry is busy developing VRPs for other propositions as well.

At a glance: VRPs for sweeping versus VRPs for other use cases

VRPs for sweepingVRPs for other use cases
All CMA9 banks must offerOptional for all banks
Free to usePotentially charged
Free to accessRequires a contract
Launch due summer 2022At the discretion of individual banks

The real-world business benefits of VRPs for sweeping
By coupling VRPs with sweeping, the OBIE has identified potential benefits relevant for both consumers and SMEs. These include:

Building up savings

Currently there is £100 billion pounds tied up in the UK’s business current accounts earning little interest. However, though many businesses are cash-rich, many don’t have the time or inclination to do anything with their savings.

An instruction could be set up with a savings company to monitor a business current account. Every time the balance goes over a certain amount, that money could be swept into a business savings account. Every time a balance drops below a certain amount, money could be swept back (though there is acknowledgment that current low interest rates make this of limited value).

Preventing overdrafts

There is potential for sweeping to create a form of unbundled overdrafts to bring more competition to the business current account market.

The real-world business benefits of VRPs

While there are pockets of opportunity for VRPs and sweeping for SMEs, our panel saw the real prize in non-sweeping use cases. This could be as a replacement mechanic for existing payment methods that carry particularly high cost, or as a route for better, more timely payments. These include:

Cost savings on international payments

According to a report in 2016, approximately £4bn of excess profit was generated by banks where small businesses default to make international payments. That number is only set to increase. VRPs for sweeping could be used to take the friction out of using an alternative payment company or FX business.

Tax efficiencies

As HMRC embraces open banking-enabled technology, we know the revenue is looking for more real-time options to support prompt and secure payments. Not all SMEs manage tax well – but what if tax could be siphoned off for payment at the point of invoice collection?

Tackling late payments.

With late payments the thorn in the side of many SMEs, our panel were more animated when discussing the wider use of VRPs to help them get paid, whether in a real-time retail environment, or in supporting instant payments.

New options in the subscription economy

The subscription economy continues to expand, with many SMEs participating. VRPs offer a method of payment which could combine the low cost of Direct Debit, with the speed and flexibility of cards, which could be a powerful alternative for this growing market.

So what’s the verdict?

Our discussion clearly demonstrated the appetite from the market to use VRP technology and take advantage of this capability.

Helping mitigate late payments were deemed the real prize, but our panel also welcomed removing some age-old headaches, such as the indemnity claims associated with Direct Debit.

The final thought was that the innovations discussed would be helpful if they provide a benefit that is easily articulated and saves time. The key to adoption will be in ensuring time and cost barriers are overcome to ensure SMEs get to the start line.


Notes

Report based on discussions at the OBIE SME Think Tank which took place on 23rd September 2021.

The Open Banking Implementation Entity (OBIE) has published the Open Banking Impact Report (October 2021) assessing the extent to which open banking is helping consumers and SMEs.

It paints a positive picture. Our new research found that there are a growing number of services in the market, and these are increasingly being adopted by customers.

This is an exciting and unique piece of new research. It is the first cross-market quantitative research undertaken which seeks to understand verified customer attitudes to open banking-enabled services. 

Most users say that open banking apps are helping to resolve their biggest financial challenges – keep to budgets, reduce unnecessary expenditure, and shop around for deals

Who is using apps?

The research objectives were to establish the profile of customers using open banking-enabled money management and micro savings apps, to understand their reaction to using these apps and whether they were benefiting from using them. Our report forms part of our commitment to present a full picture on the development of open banking, and evaluating the benefit it is providing to end-users.

Apps are easy to set up

The results are clear, demonstrating that an overwhelming majority of users have a positive attitude towards using these apps. Ninety per cent of consumers find these banking apps easy to set up and over three-quarters (76%) of customers say that they will, or are likely to, continue using them.

Richard Koch, Senior Policy and Public Affairs Specialist, OBIE

But the most important question is whether these services are actually helping consumers to be more engaged with their finances, make better decisions, save more, or get better deals?

The results are extremely encouraging. Most customers using open banking products (76%) acknowledged that these services have helped them save more and build a financial cushion. Those customers using PFM apps told us that they were:

  • helping them to keep on top of expenditure (75%)
  • reduce unnecessary expenditure (62%)
  • keep to a budget (64%)
  • shop around more (59%)
  • reduce fees and costs (55%).

Creating a financial buffer

Savings app users clearly believe the apps are helping them to save. For more than one in five, this was their first savings account, and overall, nearly two-thirds had seen their savings go up since they started to use their app. Three-quarters agreed that they now found it easier to regularly save money left over each month, with 71% now feeling more confident that they have a financial cushion or buffer to meet unexpected spending.

This tangibly demonstrates the progress that open banking is making in helping to address one of the biggest financial challenges that UK consumers are facing, post-pandemic. One fifth of the UK population has less than £100 in savings, and one in 10 have no savings at all. 

For the first time we can profile the early adopters of two core open banking-enabled propositions. Twenty-seven per cent rate themselves as low on financial confidence and many of those adopting these services faced significant levels of worry about aspects of their finances:

  • 43% worry they don’t have enough savings
  • 31% worry about their level of debt
  • and 18% struggle with their monthly bills.

These are exactly the consumers who can benefit most from support to achieve better financial outcomes. 

Continued – and extended – use

Alongside findings from consumers that they are happy using open banking apps, is their view that these services will continue to serve them well into the future. Indeed, so much so that 84% of respondents said they would be interested in expanding their use of open banking services. Only 8% indicated that they would not.

Addressing financial needs

The results demonstrate that, in the eyes of consumers accessing them, new open banking services are genuinely helping to address their key financial needs. We see positive, committed customers, really benefiting from using these services and a growing number of apps.  An additional 13 open banking-enabled products and services have come to market in the first six months of the year.

We also see rapid growth in the number of active users of open banking services – penetration among digitally-engaged customers has been steadily increasing: from 2.5% in January 2020 to 5 – 6% earlier this year, and now around 8%.

As the pool of consumers and providers grows, open banking will increasingly empower customers, taking the stress out of finance and helping to cut the complexity of financial decision-making in a way that puts them firmly in control of their financial lives.

You can read the full report here.

What consumers say

As part of our research, we also asked independent research agency, Marketing Means, to interview a small number of UK consumers, from a range of age groups and income brackets, who shared their experience of using some of the market-leading open banking apps. You can read the full report here and insights from the report below. 


Notes:

The report is built using a methodology developed by the Personal Finance Research Centre at the University of Bristol. We produce a new report every six months.

The insights are based on several data sources and research studies which we detail in the methodology sections.

As part of our research, we also asked independent research agency, Marketing Means, to interview a small number of UK consumers, from a range of age groups and income brackets, who shared their experience of using some of the market-leading open banking apps. You can read the full report here and insights from the report here. 

It was wonderful to see so many members of the open banking community at the recent Open Banking Expo and at our own ecosystem events. It reinforced how much we have all missed meeting in person and, even in the two short years since the pandemic, how much progress open banking products and services have made.  

We look forward to continuing this collaborative journey to help open banking reach its true potential.

From our own point of view at the Open Banking Implementation Entity (OBIE), we are pleased to say that in those past two years, we have: 

  • delivered most of the agreed revised roadmap 
  • seen the launch of successful account-to-account (A2A) payments 
  • witnessed the rise of the QR code, particularly for charity payments, including the legendary Captain Tom campaign 
  • delivered the standards for Variable Recurring Payments (VRPs) for sweeping  
  • and seen HM Revenue & Customs (HMRC) take £1.5bn in tax payments via open banking. 

And some of these milestones turned out to be hot topics for discussions at Expo. 

David Beardmore Ecosystem Development Director, OBIE

Unleashing the potential of VRPs  

On the main stage, my colleague Alan Ainsworth, Head of Policy at the OBIE, chaired a session on VRPs.  

Niamh Greally, VP Product at Chip, explained how the savings app helped users save more easily, cut the cost of debt, and make money work harder, and that VRPs would make it easier to sweep spare money into interest-earning accounts.  

Fliss Berridge, Director and Co-Founder at payments platform Ordo, highlighted further opportunities for VRPs to play a part in smooth point-of-sale payments and invoicing, as well as the potential for managing irregular – as well as – repeated payments. 

Matt Parish, Product Lead, VRP, at API developer TrueLayer, which provides the platform for Chip, spoke about how 2022 will be the year of VRPs and that he hoped to see some APIs go live in January. 

The panel agreed that there were opportunities to challenge Apple Pay and Google Pay and that VRPs will be a game-changer for consumers and SMEs alike. 

Consumer attitudes to apps 

The OBIE launched its second Open Banking Impact Report which assesses the adoption of open banking services in the UK. It paints a positive picture, showing that customers who are using open banking-powered apps want to continue using them – particularly apps that help tackle financial challenges such as sticking to budgets, reducing unnecessary expenditure, shopping around for deals, and minimising bank fees and charges. 

The challenge, as always, is to build sufficiently compelling propositions to persuade both consumers and businesses to feel confident in sharing their data.  

HMRC – the ultimate use case 

At my own session, a fireside chat with James Hickman, Chief Commercial Officer of Ecospend, we discussed how the UK government became a global leader in open banking by using the technology to collect nine different kinds of tax, ranging from corporation tax to PAYE to VAT. Kevin Guest and Kseniya Shuturminska from HMRC were on hand to share that there are plans to extend that to a total of 30 different products next year.  

The HMRC team also revealed that it is helping other government agencies explore how they can use open banking to collect payments. And just in case you thought it was all about taking money from citizens, the team is also looking at delivering outbound payments to support vulnerable customers.  

Finishing up, our new Chair and Trustee, Charlotte Crosswell, delivered the closing keynote, sounding another note of optimism, in particular about payments.  

She said: “HMT and the Payments Systems Regulator have also indicated their support for the development of open banking payments.  How can we unleash the potential for customers and businesses to pay and get paid by open banking payments? There are a lot of unknowns, but I do know that we as an industry can solve this.” 

Our thanks go to Adam Cox and his team at Open Banking Expo for getting us all together in an engaging, safe and enjoyable way.  

What is clear to me, is that two years without meeting is too long. We look forward to getting together soon to continue this collaborative journey to help open banking reach its true potential. We will be hosting more in-person events in the coming months to facilitate knowledge-sharing, networking and the continued growth of this exciting ecosystem we are privileged to lead.  

Watch this space for details of upcoming events!