EXECUTIVE SUMMARY

The second half of 2023 saw continued strong growth in open banking penetration. By January 2024, the proportion of digitally active consumers using open banking has grown to 13% or 1 in 7 (see Notes and Methodology section on p12 for further details on all sources in this report).

For consumers this has risen to 13% and for small businesses to 18%. In the last Impact Report in June 2023, overall penetration was 1 in 9 so this represents continued strong growth in the adoption of open banking.

Initial analysis suggests that this level of penetration is significantly higher than many other European markets. PwC has estimated that in the key European markets of France, Spain, Italy and Germany, around 2% of digital consumers used open banking in 2022.

This is supported by Open Banking Limited (OBL) analysis of data from Italy which suggests that in the first half of 2022, 1.3% of digital consumers were active with open banking. The comparable figure in the UK at this point was 9.2%.

PwC estimates that the total number of API calls in Germany, Italy, France and Spain was 6.4 billion compared with 14 billion in the UK alone in 2023.

Open banking enables two quite distinct services for users: a more convenient way to make payments and the ability to set up secure data connections.

For the first time in August 2023, the penetration of open banking payments overtook data, although there was growth in both. The expansion of open banking payments is a continuation of the existing trend towards growth, however a noticeable uptick in data penetration occurred, which increased to 7.2% after several months of limited growth.

It is possible that the rollout of open banking connections to Apple Wallet*® in iOS 17 in November 2023 is one of the drivers of this growth, but we do not have confirmation at this point. Payment penetration was higher at 8.2%.

Record growth in payments

January 2024 saw a record number of open banking payments made, totalling 14.45 million. Some of this growth can be explained by the traditional surge in self-assessment tax payments to HM Revenue and Customs (HMRC) in this month.

Data from Ecospend Trustly, the third party provider (TPP) which provides open banking services to HMRC self-assessment customers, revealed that over 1m payments were made to HMRC via open banking, an increase of 140,000 or 16% on the same period in 2023. The ‘HMRC factor’ is a key factor in January’s growth, but far from the only driver of payments growth given that there were 700,000 additional users making a payment in January 2024 versus December 2023

To put into context the growing importance of third party-initiated transactions, open banking payments now represent almost 4.5% of total Faster Payments (FPS) volumes.

This is a pivotal year for open banking as it moves towards open finance and beyond to smart data, so it is positive to see strong growth across all areas – both data and payments, and both audiences, consumers and small businesses.

We hope that, as the Data Protection and Digital Information (DPDI) Bill makes its way through Parliament, and our own work with the Smart Data Council, will see the progression of wider regulatory initiatives that will deliver the benefits of open banking to other economic sectors such as banking, energy, finance, transport, telecoms, home-buying, and retail. This will take open banking beyond a competition remedy to deliver a true public good.

*Apple Wallet is a registered trademark of Apple Inc registered in the US and other countries and regions