Seven million people in UK used open banking services in 2022

More than seven million people in the UK used open banking last year, five years after the competition regulator forced banks to introduce services.

According to figures, reported to Open Banking Limited (OBL) by the nine banks and building societies that had to implement open banking functionality, two million users have been added since this time last year.

Open banking services were made possible by the European Union’s Payment Services Directive 2 (PSD2).

In January 2018, UK banks were required to implement the Competition and Markets Authority’s open banking regulations. This led to the development of application programming interfaces (APIs) in banking to give consumers more control over their accounts. Through these APIs, third parties and multiple finance firms can use a consumer’s data to recommend the best service, including bank accounts.

The end goal was to increase competition in a sector dominated by big financial services companies. Customer banking data is shared by the industry through APIs, with customer permission, enabling businesses to offer tailored products.

Marion King, chair of OBL, which enforces open banking obligations on banks, said: “Open Banking is good for the nation, increasing competition and allowing consumers and SMEs to benefit from new and innovative ways to manage their financial lives.

“As we await key recommendations on the future vision for open banking from the Joint Regulatory Oversight Committee, this strong growth underlines the need to continue the momentum so that the many benefits of open banking are developed, promoted and made available to millions more of our citizens,” she said.

A total of 1.2 million of the users were doing so for the first time. “From access to cost-effective credit, building a regular savings habit or making more informed financial decisions, Open Banking is delivering the means for our citizens to improve their financial wellbeing,” said Henk Van Hulle, CEO at OBL.

While open banking has seen gradual take-up and the development of a new sector of fintech, open finance as the next phase of open banking will go much further. Open finance will see firms share data across more services, such as mortgages and loans, also via APIs, and offer products and services from external organisations.

A survey of about 800 manager-level executives at finance firms, from IT financial services software supplier Finastra, found that 85% believe open finance is already having a positive effect and making the finance sector more collaborative. Most (80%) believe the sector is open to collaboration.

The appetite to develop open banking software in the financial services sector has added focus and resources to open banking.

For example, the acquisition of Danish fintech Aiia by Mastercard in 2021 was a sign that open banking is entering a new phase.

The takeover of Aiia – previously the Nordic API Gateway – for an undisclosed sum came hot on the heels of Visa’s €1.8bn acquisition of Sweden’s open banking fintech, Tink, in June. Both fintechs are now part of huge global financial services organisations with opportunities to integrate open banking technology into every corner of consumer and business financial activity.

The acquisition gave Aiia, like Tink after the Visa takeover, the resources to take a concept, often shrouded in mystery for consumers and many businesses, to new levels.