The third anniversary of Open Banking in the UK. Almost 300 fintechs and more than 2.5 million users have joined the ecosystem.

Every month, hundreds of thousands of UK consumers and businesses become new active open banking users. API call volume has increased from 66.8 million in 2018 to nearly 6 billion in 2020. 320,000 open banking payments were made in 2018, this has subsequently risen to over 4 million in 2020.

The UK’s Open Banking Implementation Entity (OBIE), the body tasked with designing open banking technology in the UK, today marks the third year since open banking became a regulatory requirement. The aim of this regulation was to increase competition and choice for consumers and small businesses.

„Open banking is well on its way to revolutionising the way individuals and businesses can use their financial data for their benefit. Since 2019, the number of third-party providers (businesses who use open banking technology) in the ecosystem has grown to 294,” according to the press release.

The number of API calls has increased from 66.8 million in 2018 to almost 5.8 billion in 2020¹. Cumulatively, API call volumes reached over 7 billion between 2018 and 2020.  320,000 open banking payments were made in 2018, this has subsequently risen to over 4 million in 2020.  The first business loan using open banking data was issued in November 2018, throughout 2020 TPPs routinely used open banking data to help consumers assess and boost their credit scores.

Today, more than 2.5 million people use open banking to move, manage and make the most of their money. This number has continued to grow as the technology has become more embedded and easier to use. From one million users in January 2020, the number doubled to two million in August 2020, and with the ecosystem set to hit three million shortly, has continued to show growth of 1,000,000 new users every six months.

Commenting on the progress of open banking in the UK so far, Imran Gulamhuseinwala OBE, Implementation Trustee, The Open Banking Implementation Entity (OBIE), said: “Open banking used to be the best kept secret in financial services. We have worked hard to develop the open banking infrastructure and functionality over the past three years and our significant progress is reflected, not only in the millions of active users of open banking technology each month, but in the sustained momentum of growth we are seeing. We have developed a world-leading, thriving ecosystem of nearly 300 regulated providers, who collectively are bringing innovative new products and services to market.”

Open banking implementation is now in its final stages, with the past 12 months predominantly focused on improving both functionality and usability so that more customers can make use of the technology. The number and range of new product offerings has also increased substantially: as of December 2020, 294 regulated providers are now in the ecosystem, of which 102 have live offerings in the market². Consumers and businesses can use the Open Banking App Store to explore which open banking-enabled products are right for them.

Implementation roadmap: In 2020, the final stages of the implementation roadmap was approved. Consequentially, important payments functionality such as refunds will be delivered, and performance and reliability will be enhanced.

Ecosystem product innovation: In April, the OBIE launched the Power of the Network campaign to promote and showcase how the open banking ecosystem was responding to the COVID-19 crisis with products and services that could assist those affected.

App Store: In June, the OBIE launched the Open Banking App Store to help individuals and companies find the right open banking-enabled financial products for them. The app store currently lists 96 apps and services that are live to market.

Nesta Open Up Campaign: In October, four open banking fintechs were announced as the winning finalists of the Open Up 2020 Challenge. This programme, run in association with our partners Nesta Challenges, promoted open banking-enabled solutions for individual users and built on a similar programme aimed at SME users in 2019.

SME Financial Landscape Report: In December, the OBIE published research showing that, since the start of the pandemic, the UK’s small business community is increasingly utilising the services offered by open banking providers as they look to future-proof their business operations (50% of those surveyed). Furthermore, the research identified an increase in product switching and small business borrowing.

Public sector: In December, HMRC launched a request for information exploring the potential use of open banking to deliver public services.

Mr Gulamhuseinwala concluded: “While there is still much to be done, individual consumers and small businesses are already seeing the benefits of the ecosystem and functionality we have put in place. This work serves as a natural blueprint for how the ‘open’ philosophy can be extended to everything from open finance to open telecommunications, thereby giving customers greater control and greater benefits.”

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The legislation that enabled open banking in the UK took effect on 13 January 2018, when PSD2 came into effect.

1. This meant regulated TPPs could start to integrate with APIs that had been developed by the CMA9, allowing them to conduct the technical tests necessary to start bringing propositions to market later that year.
2. This was, in effect, a soft launch: while it enabled the possibility of open banking, a huge amount of work still needed to take place to develop the Roadmap, comply with regulation and develop the ecosystem infrastructure.
3. In January 2018, Version 1 of the Open Banking Standard was available to TPPs. Version 3, which enabled the bulk of PSD2 compliance, was issued in September 2018.

The first APIs were implemented by the banks in January 2018, with third party providers appearing in the market soon after and making significant progress in 2019. The CMA was responsible for establishing the legal framework and the OBIE was mandated to ensure the effective implementation of open banking in the UK. This coincided with the introduction of the Second Payment Services Directive (PSD2) across Europe.

API stands for ‘Application Programming Interface’. It is a secure connector that allows users to plug into a database and pull information. In the example of an app such as National Rail’s, an API allows users to run an enquiry, for example, ‘When is the next train from Kings Cross to Edinburgh?’ The API then connects the user to a central database of train timetables and displays the results. In the world of banking, these APIs allow fintechs to securely pull only relevant transaction details, which it can then use in its own apps.

¹ See OBIE API data: https://www.openbanking.org.uk/providers/account-providers/api-performance/

²See OBIE December 2020 ecosystem infographic: https://www.openbanking.org.uk/about-us/latest-news/obie-highlights-december-2020/