The Open Banking Implementation Entity (OBIE), the body set up by the Competition and Markets Authority (CMA) to deliver Open Banking in the UK, has says that over 2 million customers are now using Open Banking-enabled products*. This represents a significant upswing in the use of the innovative banking technology despite the disruptive effects of the COVID-19 pandemic.
OBIE figures show Open Banking (OB) user numbers have doubled since January 2020. There has been a steady increase at a rate of around 160,000 users per month, which only plateaued in April and May when lockdown measures in the UK were introduced, before the strong growth resumed.
Research shows a sharp increase in the use of money management apps during the pandemic, of which 45% were 25-34-year-olds. According to the survey of 2,000 UK adults in early July 2020, one in five started using online banking apps during lockdown and 54% now use them regularly.
“Open Banking used to be the best kept secret in financial services. With 2 million active monthly users and growing strongly that is clearly no longer the case,” says Imran Gulamhuseinwala OBE, Implementation Trustee, The Open Banking Implementation Entity (OBIE).
“We can now see that people want to exercise their rights over their data and will do so, as long as you make it simple and secure. OB enabled products are rebalancing the market in favour of consumers and small businesses. Users are now able to engage more with their finances and getting access to better products.”
The vast majority of users are currently utilising OB to better understand their bank accounts – how they are spending their money, how they can save more effectively, how they can access tools to help them manage their income and expenditure, reduce charges for borrowing, and improve their credit rating to apply for cheaper loans and mortgages.
This coincides with the Government’s launch of its National Data Strategy and publication of its response to the Smart Data Review, which recognised OB as a leading example in the area of Smart Data and the benefits it can offer to citizens and small businesses.
Open Banking payments (which allow users to make payments conveniently and securely from their bank accounts) are expected to drive growth in the future particularly, as OB enabled payments providers take advantage of increased functionality coming online to bring innovative payment products to the market.
Open Banking can be used in multiple ways to help users access their banking data and better manage their finances. Examples of this include:
- Multi account visibility: Personal financial management apps aggregate bank account information, which in turn gives customers spending analysis and support in setting saving goals
- Access to credit: Giving banks and credit providers access to banking transaction data enables them to make more informed lending decisions, opening a much wider range of borrowing solutions and potential better lending rates for the customer.
- Debt management: Open Banking allows a customer to provide an immediate and accurate view of their debt picture to a debt advice platform This enables customers to get the best support when they have a debt management problem.
- Applying for mortgages: Unlocking your financial data both simplifies and speeds-up the mortgage application process without the need to send physical bank statements
*According to data provided by the CMA9 (Allied Irish Bank, Bank of Ireland, Barclays, Danske, HSBC, Lloyds Banking Group, Nationwide, RBS Group and Santander).