USE CASES THAT ARE ENRICHING LIVES

Many people may never need to know that open banking is powering the apps and services they use each day.

However, all metrics indicate open banking is growing fast whether it is number of API calls, number of firms, the range of propositions, or number of users.

The chart below shows the growth in open banking activity among the CMA 9, which has seen 2.4x growth over the last year. The vast majority of activity is related to data activity; nonetheless payment activity is growing considerably albeit from a low base.

Total API Volume

"The rapid take up of open banking-enabled products and services across 2020 is clear proof that the appetite is there and growing fast"

The OBIE does not ‘log’ open banking activity in the way that a traditional payment infrastructure might. This is because no open banking activity flows through the OBIE platform. Our best window on the breadth of open banking activity comes from the Open Banking App Store.

This was launched in July 2020 to help potential users easily identify products that meet their needs. The table below shows the apps and services growing year on year broken down by the primary usage categories.

*Source: OBIE data. Chart may double-count as certain propositions cover multiple usage categories.

Ecosystem Distribution

Open banking ecosystem participants are spread throughout the UK.

Visual not indicative of total open banking ecosystem due to non-UK participants and organisations holding dual or multiple roles.

PLACING PEOPLE IN THE DRIVING SEAT

Throughout 2020, open banking propositions made existing processes, such as checking or improving credit scores and comparing financial products, easier, faster, and more accurate.

Nesta Challenge research evidenced strong appetite for actionable financial guidance in the midst of the pandemic, with 38% of survey respondents seeking personalised support to help them manage their money better. The research also pointed to the impact open banking-enabled propositions are having: 82% of respondents who had already used open banking-enabled apps agreed that the services had helped them improve their money management.

It is also noteworthy that open banking-enabled solutions are now appearing in the non-bank credit space, with encouraging adoption emerging in the credit union sector. We believe that open banking-enabled services could facilitate and enhance all forms of consumer borrowing, from unsecured personal loans through to mortgage applications and approval.

DELIVERING REAL BENEFIT TO BUSINESSES

In a year marked by unprecedented challenges, many small businesses turned to open banking solutions in 2020. As referenced above, our SME Financial Landscape research provided valuable insight into the small business community’s perception of open banking between March and September of 2020.

These businesses’ adoption of solutions like cloud accounting and cashflow forecasting indicate the importance of clarity and control over their finances. The research emphasised the risk-averse nature of small business owners, many of whom nonetheless had to avail of the government’s emergency CBILs and BBLS credit schemes.

As a growing number of businesses resort to eCommerce to meet customer demand during lockdown, we anticipate payments to be a key area of growth for small businesses in 2021, providing an increasingly-visible alternative to cards or other methods at the point of check-out – a welcome development for a sector that can be subject to higher charges for receiving and processing payments.

Glossary of terms