Users of Open Banking-enabled products in the UK now exceed two million, up from one million in 2019, according to an announcement from the Open Banking Implementation Entity (OBIE).

The news reveals a doubling of usage over a period of six months from January 2020, “despite the disruption caused by COVID-19”.

On the face of it, the timing of the surge after 2019’s underwhelming uptake suggests that lockdown forced consumers and many businesses to explore new banking and payment services.

According to a July 2020 survey of 2,000 UK adults, 20 percent started using online banking apps during lockdown and 54 per cent now use them regularly.

The research, sponsored by Nesta Challenges’ Open Up 2020 Challenge, also shows a sharp increase in the use of money management apps, especially among young adults: 45 per cent of new users were 25-34-year-olds.

However, lockdown alone was not the spur: the OBIE statistics reveal a steady increase of around 160,000 Open Banking users per month since January. That growth actually plateaued during lockdown in April and May before resuming as restrictions eased.

The data-sharing core of Open Banking-enabled products is designed to help customers better understand their spending, manage their income, expenditure, and debt, or access cheaper credit.

Services like these have certainly become more attractive to consumers during the pandemic, as they turn to online and mobile services to help manage their finances – a trend that is likely to continue, especially if the economy moves into negative interest rates.

The Open Banking App Store currently houses more than 80 mobile applications and online products.

Imran Gulamhuseinwala, OBE, Trustee of OBIE, said,

“Open Banking used to be the best-kept secret in financial services. With two million active monthly users and growing strongly, that is clearly no longer the case.

“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. Open Banking-enabled products are rebalancing the market in favour of consumers and small businesses. Users are now able to engage more with their finances and get access to better products.”

David Beardmore, OBIE’s Ecosystem Development Director, added,

“Open Banking will revolutionise the way we pay.

  • “While Open Banking payments are currently a small proportion of usage, recent strong growth is a sure sign that people welcome more payments choice. We predict that payments will eventually form a considerable proportion of our growing user numbers.”

Dr Bill Roberts, Head of Open Banking at the Competition and Markets Authority, which set up the OBIE, said,

“When the CMA investigated retail banking, we found banks were not working hard enough for consumers, so we required them to give people control of their own data. By doing so, we believed this would unleash a wave of innovation and stimulate rivalry.

“The fast growth in personal customers and small businesses using Open Banking during 2020 – and hitting the two million mark – is another important milestone towards that goal.”

  • Last week, Andrea Coscelli, CEO of the CMA, hailed Open Banking as an example of the innovation that can result from opening up access to data within markets.

In a keynote speech to the annual Fordham Competition Law Institute conference, he added,

“There are also some brilliant examples of ‘regulation for innovation’ from the Financial Services sector in the UK.

“For example, the Financial Conduct Authority (FCA) has taken steps to try and ensure that regulation does not act as a barrier to innovation. It runs an innovation hub to support new and innovative businesses in navigating regulatory requirements. It also runs a ‘sandbox’ to help businesses trial new products and services in a safe environment.”

However, Coscelli warned that the power of technology platforms such as Google and Facebook acts as a brake on innovation in any markets that are driven by advertising. They create “such unassailable market positions that rivals can no longer compete on equal terms”, he said.