More than seven million people in the UK used open banking last year, five years after the competition regulator forced banks to introduce the services.
According to the figures, reported by Open Banking Limited (OBL) of the nine banks and building societies that must implement open banking functionality, two million users have been added since this time last year.
Open banking services are 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 many financial companies can use a consumer’s data to recommend the best services, including bank accounts.
The ultimate goal is to increase competition in a sector dominated by large financial services companies. Customer banking data is shared with the industry through APIs, with customer consent, enabling businesses to offer tailored products.
Marion King, chairman of the OBL, which enforces open banking obligations on banks, said: “Open Banking is good for the country, increases competition and allows consumers and SMEs to benefit from new and new ways of managing their financial lives.
“While we await key recommendations on the future vision for open banking from the Joint Regulatory Oversight Committee, this strong growth underscores the need to maintain momentum so that the many benefits of open banking can be developed, promoted and available to millions of our citizens,” he said.
A total of 1.2 million users did it for the first time. “From accessing cost-effective credit, building a regular savings habit or making more informed financial decisions, Open Banking delivers ways for our citizens to improve their financial well-being,” said Henk Van Hulle, CEO of OBL.
While open banking has seen a gradual takeover and the development of a new fintech sector, open finance as the next phase of open banking will continue to evolve. Open finance will see companies sharing data with multiple services, such as mortgages and loans, also through APIs, and offering products and services from external organizations.
A survey of about 800 manager-level executives of finance firms, from IT financial services software supplier Finastra, found that 85% believe that open finance has already had a positive effect and made the finance sector more collaborative. Most (80%) believe that the sector is open to collaboration.
The desire to develop open banking software in the financial services sector has increased the focus and resources on open banking.
For example, the acquisition of the Danish fintech Aiia by Mastercard in 2021 is a sign that open banking will enter a new phase.
The acquisition of Aiia – formerly the Nordic API Gateway – for an undisclosed sum comes on the heels of Visa’s €1.8bn acquisition of Swedish open banking fintech, Tink, in June. Both fintechs are now part of major financial services organizations around the world with opportunities to integrate open banking technology into every corner of consumer and business financial activity.
The acquisition gives Aiia, like Tink after acquiring Visa, the resources to take a concept, often shrouded in mystery for consumers and many businesses, to a new level.