The latest Open Banking Impact Report (this is our sixth report) provides regular data-driven insight into the adoption, experience and outcomes that are being delivered by open banking to the UK’s consumers and small businesses. Given that there is significant change planned for the delivery of open banking, as we move towards open finance and beyond, we are focusing on adoption only in this report. For the first time, we also compare adoption between UK and some European markets. We summarise some of the report’s highlights below. Strong growth in penetration – the second half of 2023 saw continued strong growth in open banking penetration and by January 2024, the proportion of digitally active consumers using open banking grew to 13% or 1 in 7. For consumers this rose to 13% and for small businesses to 18%. In our last Impact Report, which used data up to and including June 2023, overall penetration was 1 in 9. This level of penetration is significantly higher than many other European markets – PwC has estimated that in the key European markets of France, Spain, Italy and Germany, around 2% of digital consumers used open banking in 2022. The comparable figure in the UK at this point was 9.2%. PwC estimates the total number of API calls in Germany, Italy, France and Spain was 6.4bn compared to 14bn in the UK alone in 2023. Payments overtook data – for the first time in August 2023, the penetration of open banking payments overtook data, although there was growth in both. The expansion of open banking payments is a continuation of the existing trend towards growth, however a noticeable uptick in data penetration occurred, which increased to 7.2% after several months of limited growth. It is possible that the rollout of open banking connections to Apple Wallet® 1 in iOS 17 in November 2023 is one of the drivers of this growth, but we are not able to confirm this at such an early stage. Payment penetration was higher at 8.2%. Growth in open banking payments growth – the number of open banking payments recorded by OBL reached a record high of 14.5m in January 2024. This represents 69% year-on-year growth. 8% of these payments were variable recurring payments and 92% were single immediate payments. Looking at full year figures in the diagram below, we can see that in 2023 there were 130m open banking payments versus 68m in 2022, a year-on-year growth of 90%. Higher penetration for small businesses – we continue to see higher penetration for small business customers than consumers, although the gap continues to narrow. Consumer penetration is 13% (1 in 7), whereas small business penetration has climbed to 18% (1 in 5). Payments versus data services – small business users remain more likely to be users of data services, while consumers balance their use between payments and data. A total of 56% of active consumers are payment users versus 25% of active small businesses. Open banking data connections see higher penetration – from a high point of 6.9% in May 2022, data penetration had seen a slight decline to 6.4% in September 2023. However, from this low point, we have seen a return to growth with penetration increasing to a new record high of 7.2% in January 2024. “In January 2024, 1 in 7 of us were using services powered by open banking and growth continues to be strong. That’s the perfect situation as we start looking at new opportunities, new segments, and new functionality to build on this growth and make open banking-powered services more useful, more convenient and more relevant to our everyday lives.” Daniel Jenkinson, OBL Senior Policy Manager Read the report [1] Apple Wallet is a trademark of Apple Inc., registered in the US and other countries and regions. You may be interested in Thought Leadership ‘Smart Data: Unleashing the full potential of open banking’ – event round-up 23 Feb 2024 Read more Thought Leadership OBL Trustee responds to PSR’s Call for Views on the expansion of VRPs 15 Feb 2024 Read more Research New Impact Report reveals increased adoption and product innovation 16 Nov 2023 Read more
You may be interested in Thought Leadership ‘Smart Data: Unleashing the full potential of open banking’ – event round-up 23 Feb 2024 Read more Thought Leadership OBL Trustee responds to PSR’s Call for Views on the expansion of VRPs 15 Feb 2024 Read more Research New Impact Report reveals increased adoption and product innovation 16 Nov 2023 Read more
Thought Leadership ‘Smart Data: Unleashing the full potential of open banking’ – event round-up 23 Feb 2024 Read more
Thought Leadership OBL Trustee responds to PSR’s Call for Views on the expansion of VRPs 15 Feb 2024 Read more
Our latest Open Banking Impact Report (this is the fifth report) demonstrates continued growth in adoption of open banking. The data, which covers the six months to June 2023, reveals that over 1 in 9 (11%) British consumers are active users of open banking, an increase from 7% in December 2021. It also shows the power of payments in driving the take-up of open banking by UK businesses and consumers: 9.7m payments were made in June 2023, an increase of 88% on June 2022. We have seen further growth since the cut-off point for this report, with 10.8m payments made in August 2023. There were double the volume of payments in the first six months of 2023 than was seen in the same period of 2022. This is primarily single immediate payments (SIPs). Today 91% – 92% of this volume comprises SIPs – such as tax payments, wallet loads, and credit card repayments. We expect the expansion of variable recurring payments (VRPs) to provide additional growth in the future too. Small businesses are continuing to lead the way in adoption – 17% of firms are active users of open banking, often as part of a cloud-based accountancy package. In contrast to consumer use, data-driven services are more common than payments, and are helping firms to benefit from increased productivity, near real-time cash flow insights, and reduce costs. Availability of servicesThe report also shows that the availability of open banking services is evolving. The number of third party providers (TPPs) with live-to-market services has shrunk, falling from 159 to 151, in part due to consolidation, as well as exits from the market. This shows a shift from some of the early expectations of open banking, into a more pragmatic view of where it works, and where it is sustainable. For example, in terms of better financial decision-making (one of open banking’s key outcomes), there was some hype surrounding personal finance management (PFM) solutions. We have seen several exits in this space, and we know that a large PFM service is closing soon. There’s still a clear consumer need for these services – we undertook research which shows how much consumers value them – but it is extremely hard to create a sustainable financial model. However, we expect to see this counter-balanced by other market entrants next year, operating in a different way, where open banking is already integrated into a product that consumers value and use. Value of transactionsFor the first time, we were able to include data from Pay.UK in our report, which showed that the average transaction value (ATV) of open banking payments is around £450, meaning the total monthly value of open banking payments is around £4.5bn. It’s also interesting to compare this with the ATV of debits, which is just £30, while the ATV of credit is £55. Agent propositionsWe identified 208 agents of account information service providers (AISPs) with live-to-market propositions, focusing on the three most common outcome areas: Improved financial decision-making – 43% Expanded payments choice – 14% Better borrowing – 17%. We also saw significant growth in the number of propositions that offer ‘Increased access to advice and guidance’ (22), including propositions that aim to produce insights on the environmental impact of financial behaviour, or to help users optimise tax planning. Unique and innovative productsThis market is a highly innovative part of the ecosystem, with many firms developing unique propositions for specific market needs. These include using open banking data to build a pre-qualified rental profile for prospective tenants to share with landlords, and an SME finance platform that offers funding through a revenue share model. Other insights show that new open banking service providers are increasingly choosing to utilise the services of regulated TPPs, rather than become regulated themselves. These alternative approaches deliver cost and time-to-market advantages. The six-monthly snapshots in our Impact Reports provide a unique view of the changing shape of open banking services – and how they play an increasing part in the day-to-day financial life of the UK. It’s exciting to see the increased adoption of open banking alongside the emergence of new providers and innovative products which help consumers budget and save more effectively, and support businesses with cost efficiencies and decision-making. Read the report You may also be interested in Impact Report Open Banking Impact Report – October 2023 19 Oct 2023 Read more Report New Impact Report sees significant growth in open banking payments and increased business use 30 Mar 2023 Read more Impact Report OBIE: New Impact Report shows cloud accounting allowing SMEs to run businesses more efficiently 22 Jun 2022 Read more
You may also be interested in Impact Report Open Banking Impact Report – October 2023 19 Oct 2023 Read more Report New Impact Report sees significant growth in open banking payments and increased business use 30 Mar 2023 Read more Impact Report OBIE: New Impact Report shows cloud accounting allowing SMEs to run businesses more efficiently 22 Jun 2022 Read more
Report New Impact Report sees significant growth in open banking payments and increased business use 30 Mar 2023 Read more
Impact Report OBIE: New Impact Report shows cloud accounting allowing SMEs to run businesses more efficiently 22 Jun 2022 Read more