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.”
In our latest Open Banking Impact Report, we share unique new research into how small businesses are utilising open banking-driven cloud accounting services. We set out to understand how these services are changing the way in which the UK’s small firms manage their business and whether this is leading to improved efficiencies, insights, and cost savings as a result. Business attitudes to open banking-enabled servicesWe believe this is the first time any quantitative research has sought to understand small business attitudes to these open banking-enabled services, which is possible for the first time given the growth in adoption. Our independent research agency interviewed 904 users of cloud accounting packages to understand in detail their day-to-day experience of this software. More specifically, we wanted to explore the role that open banking has played in the adoption of cloud accounting. We’re pleased to reveal that there are some very positive outcomes, which show that these services are delivering considerable benefits to the small businesses that adopt them. For full details of our research, view the June 2022 Impact Report here. Open banking has become a critical component of cloud accountingAlthough cloud accounting services pre-date open banking, it’s helpful to note that 75% of users started using the software less than three years ago, with 36% having adopted it within the past year. More significantly, 72% of respondents cited the ability to connect to a bank account as an important feature of their service, and 58% regarded the availability of real-time transactions – an integral part of open banking connections – as important. Snapshot of financial positionWe know that many small businesses find it hard to accurately understand their current financial position. An overwhelming majority (77%) of respondents reported that they now have better visibility of their financial position at any given time as a result of using these services. Cloud accounting users are positive about the serviceSmall businesses of all sizes have positive experiences of using cloud accounting software, with 87% of respondents indicating that they will continue to use the service. And although cloud accounting represents an additional cost for many tightly-squeezed small businesses, a large majority (79%) also believe the service offered good value for money. Users find it easier to interact with their accountantsAs trusted advisers, the recommendation of their accountants plays a key role in small businesses adopting cloud accounting, and 73% of the firms we surveyed agreed that using this software made it easier to collaborate with their accountant. These results are even more marked when looking at larger and more complex businesses – 76% of businesses with five to nine employees agreed with this statement, as do 78% of businesses with a turnover exceeding £500k. Supporting efficiencies and profitabilityIt’s clear that using cloud accounting software has helped small businesses feel more efficient and 84% of the firms we spoke to agreed with this statement.When we explore these efficiencies in more detail, we can see more specific benefits. Late payments – 70% of businesses said they saw benefits in the management of late payments, a long-standing challenge for many firms and one that they find hard to track. Cost savings – some small businesses suggest that cloud accounting services are saving them money: 59% said it had delivered internal savings and 64% external cost savings. Reduced reliance on external accountancy support – 44% of small businesses reported that their use of the accounting software means they no longer need external accountancy support. These are important ways to help businesses feel more productive and profitable – a key aim of the 2021 Kalifa Review. Rob Burlison, Director of Corporate Affairs, Global at Intuit, makers of small business accounting platform QuickBooks, said: “Intuit QuickBooks welcomes the OBIE’s Third Impact Report exploring the role of accounting software in the UK. “Open banking is super-charging real-time cloud accounting which supports small business cash flow planning, streamlining business administration and helping them get paid quicker. “The success of open banking in the UK merits consideration from governments around the world as they decide how best to roll out their own versions of open banking.” Recent research from the Federation of Small Businesses found that 72% of small businesses struggle to accurately forecast their earnings for the year, suggesting that these new insights are particularly valuable. The ability to calculate tax and VAT, to share information with their accountant and the availability of real-time transaction data were also rated as valuable features of the software by our respondents.
We’re pleased to publish our third Open Banking Impact Report, which regularly assesses the progress of open banking adoption in the UK and its impact on both consumers and small businesses. Progress is positive, as the availability – and range – of services continues to expand, and adoption continues to grow. As part of this report, we have also produced independent research into small business use of open banking-enabled cloud accounting services, and we explore how these services are supporting the management of their accounting needs and business decisions. Unique research into business use of cloud accountingWe believe this is the first research of its kind, offering unique insights into how seamless access to real-time open banking data is helping to improve financial decision-making, as well as helping to tackle perennial business problems such as productivity and late payments. You can view the full report here. Key insights include: Adoption has continued to grow, with 10–11% of digitally-enabled consumers now estimated to be active users of at least one open banking service. This is up from 6–7% in March 2021. In the six months to March 2022, there were 21.1m open banking payments, compared with 6.1m in the same period in 2021. Month-on-month growth is running at around 10%. Availability of services continues to expand, however growth is increasingly coming from participants which are not regulated as Third Party Providers (TPPs), such as agents. In March 2022, there were 128 fully regulated firms with live-to-market open banking-enabled products and services. This figure has remained static since September 2021. The market remains dominated by propositions addressing:– improved financial decision-making (40)– expanded payments choice (31)– better borrowing (23). New data on the availability of products and services offered by agents of regulated TPPs. This is the first time we have included this information and we have identified 142 of these firms offering live-to-market services. Business penetration (11%) is slightly higher than retail (10%), but the gap between the two has closed significantly since 2021. The split between types of open banking usage is 64% data, 30% payments with 6% of customers using both, however business users are more strongly skewed towards data. Business benefits from open bankingKey insights from our research into business use of open banking-enabled cloud accountancy services allow us to understand, for the first time, the types of businesses regularly using open banking and the benefits they see from it. It appears that open banking plays a key role in cloud accounting, and 72% of respondents rated the ability to connect to a bank account as an important feature of their cloud accountancy service. A further 58% felt the same about the availability of real-time transactions, a consequence of open banking connections. We also know many small businesses find it hard to accurately understand their current financial status. An overwhelming majority (77%) of respondents report that they now have more immediate and accurate insights into their financial position at any given time as a result of using these services. Mark Chidley, OBIE SME Customer Representative, said: “The OBIE’s third Impact Report shows that not only are more and more small businesses adopting cloud accounting services since the introduction of open banking, but also that these services are helping to address some of the extraordinary challenges which confront small businesses in 2022 and beyond. This latest research brings valuable insights into the various ways in which open banking-driven cloud accounting services are helping small businesses become more efficient, make better decisions, and collaborate more effectively with their accountants.” As well as the positive impacts for small businesses, continuing regular monitoring of open banking’s impact represents an essential method of ensuring it delivers for all end-users – both consumers and small businesses.” Research methodology This report is intended to provide regular insights into the development of open banking in the UK, focusing on outcomes for end users. It is built using a methodology developed by the Personal Finance Research Centre at the University of Bristol. The insights are based on a number of data sources and research studies which are detailed in the methodology sections. Because of the fast pace of change and difficulty in definitively establishing end user outcomes, findings are indicative and should be used for information purposes only. For more information on the research design, please view the full report. You can read our previous Open Banking Impact Reports here: Open Banking Impact Report October 2021 Open Banking Impact Report June 2021
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 wide range of age groups and income brackets, who shared their experience of the market-leading savings apps. How can apps help the saving habit? Open banking savings apps offer a handy, ‘low impact’ way of helping individuals to save. This works in two ways: providing an additional means of saving for more established savers, or in some cases, provide a way of saving to individuals who have otherwise struggled to do so. Most of the savers we spoke to thought that their ability to save effectively was enhanced by using these apps, and they expected to continue to use them. They typically appreciated the way in which their app could enable regular saving for them in the background and found it convenient and enjoyable. Particularly when it brought them an unexpected boost in savings – however small. The idea is that these features help consumers to save without having to think about it, enabling them to gradually build up their savings. Many consumers said they enjoyed trying out these new ways of saving and that there was some fun and enjoyment in the process. While they understood that it might take some time to see a significant difference in their overall level of savings, several of those customers interviewed felt that using the app had helped them build a sustainable savings habit. Several customers felt that using the app had helped them build a sustainable savings habit Seeing savings build up Nearly two-thirds of users reported that their overall level of savings had gone up since they started using a savings app. However, a further 20% said that they had not been using the app long enough to tell, (not unexpected since nearly one third had only used the app for less than three months) with only 13% indicating that their savings had not increased. Here’s what the interviewees said about how using an app had impacted their savings habits. Q. What are the positive aspects of using your savings app? A. “I really like the saving round-up feature. I’d say overall they’ve met my expectations and exceeded them. And using it, I’ve matured as a saver.” A. “It’s all very easy. How much goes in varies, as it runs itself in the background, but I really like the way I can slow down or speed up the savings rate through the app. It really gives me confidence that if I’m having a heavy week, I can adjust it.” A. “I save through two apps. One has a fairly standard account but there are some issues with getting money out of that one. I’ve had some delays on withdrawals, so I tend just to leave the money in there. On the other app, I’m more engaged as I’ve got money going into two funds. One is a standard one but the other one has a higher risk rating. I enjoy doing that one. It’s satisfying seeing what happens with it, and fun as well.” A. “The advantage was, I didn’t want to replace my bank account, so I didn’t want to go down a Monzo route. I wanted an additional savings facility that would link to different accounts I have.” Q. Was the app easy to use and did it help you understand your finances better? A.”I really like how the app slows me down. Because it’s a restricted access, I can’t just dip into it as I have done in the past with others. But also, that makes me reflect and means I can think about my money more. It’s changed the way I am with money, for the better.” A. “I like the flexibility. You can dial the savings rate up and down. You can boost a payday. I can use it flexibly to save when I’ve had a bonus. And I like the way they describe the investment plans – ‘standard’, ‘balanced’ – I think that’s a useful way to explain them, easy to understand. The app has a really good dashboard, it almost feels as if you’re getting a bespoke savings service that’s easy to use.” A. ” I was attracted by the way it saves in the background, so you hardly notice it’s happening. When I started, I thought I’d build up a substantial fund really quickly. I’ve got a more realistic view now, but I’m still really happy with it.” Q. Will you continue to use and expand your use of open banking services in the long-term? A. ” Yes, I definitely feel more engaged with the saving I’m doing because of using the app. I do like to watch it grow, and I check it most days during the week. I’m now thinking about what more I can do. For example, I’m now interested in looking at my pension. Also, I think I’ll consider looking at the investment side of things and crowdfunding.” I definitely feel more engaged with the saving I’m doing because of using the app. I like to watch it grow, and I check it most days. A. “I think I will try the investments through the app. I’ve done crypto trading in the past and that was fun, but this looks different, more mature and longer term. Yes, I would do it through the app as they seem very focused on saving.” A. “I have been saving for holiday in Bali. But once that’s out of the way, I think I’ll move onto stocks and shares. So, this is another way to save. My ISA is maxed out and I see that investment charges through the app are lower than on my investment platform.”Watch our short video to see how savings apps work. 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 find out more about the methodology in the full report.
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.
In our second Impact Report (October 2021) we evaluate the continued expansion of open banking services in the UK and their growing adoption. We also analyse consumer reaction to open banking services and explore whether they are changing how individuals manage their finances and whether they are seeing long-term benefits to their financial health. The key insights in this Impact Report are: Availability of services continues to expand, although the pace of growth appears to have slowed. We have comprehensive coverage in three outcome areas: decision-making, payments and borrowing. Adoption has continued to grow with 7.5 – 8.5% of digitally-enabled consumers now estimated to be active users of at least one open banking service. Our research found that most customers (91%) find services easy to set up and they have a positive Net Promoter Score (NPS). Most customers of these services (76%) intend to continue to use them. Services seeking to help consumers make better financial decisions seem to be doing exactly that. Significant proportions of customers claim that these platforms are helping them keep to budgets, reduce unnecessary expenditure, shop around and minimise fees and charges. We see similarly positive findings on the savings side, with customers reporting that these services have helped them save more and build a financial cushion. About this report The Open Banking Impact Report is a key tool to help policymakers and others in our ecosystem to understand how open banking is developing and whether it is helping the UK’s consumers and small businesses. The report is built using a methodology developed by the Personal Finance Research Centre at the University of Bristol. The insights are based on several data sources and research studies which we detail in the methodology sections. We produce a new report every six months. Read the report.
The Trustee of the Open Banking Implementation Entity (OBIE) has instructed OBIE to develop a Consumer Evaluation Framework (CEF) to properly assess the impact of open banking on retail consumers and SMEs. The framework is intended to provide the basis for measuring the delivery of key consumer outcomes envisaged by the CMA Order and was developed by the Personal Finance Research Centre at the University of Bristol. Read the report.
Building on the insights from our recently published Annual Report, this 2020 round up details some of the achievements and milestones from across the open banking ecosystem.
Created in the interests of transparency – to provide an overview of the OBIE’s activities for 2020 and 2021. 2020 was a transformational year for open banking and for the Open Banking Implementation Entity (OBIE). Open banking, and the Open Banking Implementation Entity, have come a long way since the Competition and Markets Authority’s retail banking market investigation in 2016. This report explains who we are and why our role matters; it summarises our work across 2020 and 2021, and it provides an overview of open banking-enabled products and services. We highlight the day-to-day activities at the OBIE, as well as an overview into our governance and financials. Read the OBIE’s Annual Report today: The OBIE’s Annual Report – Digital edition Read the OBIE’s Annual Report for 2020 and 2021 on our digital Foleon platform – optimised for desktop, tablet and mobile to ensure a smooth and engaging user experience. The OBIE’s Annual Report – Print edition Access the OBIE’s Annual Report for 2020 and 2021 as a PDF – either through your browser or on whatever document reader software your organisation enables. What’s in store for open bankingLearn about the OBIE’s objectives and ambitions for the rest of 2021, as we continue to build momentum and enable the thriving open banking ecosystem. https://player.vimeo.com/video/499241835″ width=”640″ height=”360″ frameborder=”0 We’ve come a long way in the last three years. Curating a vibrant ecosystem of banks and fintechsFacilitating the use of a common set of standardsEnabling API volumes to grow and adoption to build Open banking – the future of money, where you’re in control.
Review the presentation material, early impact analysis and Q&A recap from our recent eIDAS webinar, reviewing the FCA’s statement on TPP identification post-Brexit.