INTERMEDIATE OUTCOMES (ADOPTION)

Headlines

We estimate that 10 – 11% of digitally-enabled consumers and small businesses used open banking during December 2022.
This figure has increased from 9 - 10% in March 2022
Small business penetration (16%) is significantly higher than consumer (10%) with the gap continuing to widen slightly.

The split between types of usage is 64% data, 30% payments with 6% of customers using both, however business users are more strongly skewed to data.
In the six months to March 2022, there were 21.1m open banking payments, compared with 6.1m in the same period the previous year. Month-on-month growth is running at around 10%.

Open banking penetration

Using data submitted to the OBIE by the CMA97 , we have estimated the penetration of open banking into the total base of digitally-enabled consumers and small businesses. This analysis should be considered directional only. Please see figure 9.

Figure 9: Estimated penetration of open banking into the broader digitally-enabled population

7Source: the OBIE estimates based on CMA9 ASPSP submissions, corroborated against BEIS, ONS, Eurostat and UK Finance.

Note: This data is based on submissions of active user numbers (active defined as active in the last month) and digitally active end users by the CMA9. It therefore only represents penetration within the CMA9 digital customer bases, although this is a significant share of the UK population. This data has been corroborated against data on the total adults and small businesses currently using internet banking, derived from ONS, Eurostat and UK Finance. Note that some data has been rebased, based on additional data received about the growth in the number of digital accounts, which has slightly reduced previously reported numbers in March 2021, September 2021 and March 2022.

Recognising the limitations of the underlying data, we estimate that one in nine digitally-enabled end-users were using at least one open banking-enabled product or service in December 2022. This figure has increased from one in eleven in March 2022. We can see a clear spike in the data in January 2022, which we attribute to many new users using open banking payments to make tax payments to HMRC in that month.

While we can see a clear progression in the penetration of open banking, it is noticeable that, since September 2022, penetration has plateaued at around 10.5%. It will be necessary to wait for additional data in 2023 to understand whether this is a temporary phenomenon or a longer-term trend.

Figure 10: Estimated open banking end-user adoption10

8Source: the OBIE estimates based on CMA9 ASPSP submissions, corroborated against BEIS, ONS, Eurostat and UK Finance. Represents the % of CMA9 digitally-enabled end users with active open banking connections in the previous month. Note: This data is based on submissions of active user numbers and digitally active end users by the CMA9. Active is defined as having been active within the past month. It therefore only represents penetration within the CMA9 digital customer bases, although this is a significant share of the UK population. This data has been corroborated against data on the total adults and small businesses currently using internet banking, derived from ONS, Eurostat and UK Finance.

"We estimate that 1 in 10 digitally-enabled end users were using at least one open banking-enabled product or service in March 2022. This has increased from in 1 in 16 in March 2021."

Gap between business and retail penetration has widened

When we break this penetration down by account type, we see that, proportionally speaking, more small businesses are active users than consumers, and that this gap has started to widen. Please note that this data has been rebased since the last report.

This shows that just over 16% of small businesses are estimated to be active open banking users, particularly driven by the growing adoption of cloud accounting and its migration towards open banking. In contrast, around 10% of consumers are using open banking.

Figure 11: Estimated open banking end-user adoption (retail versus business)

Usage for data versus payments

We can also provide estimated splits between use of open banking to provide access to transactions: account information services (AIS) and open banking payment initiation services (PIS).

When we look at all users of open banking, 89% are retail customers. This is not surprising as there are significantly more consumers than small businesses in the UK.

However, there is a clear difference in usage patterns, with small businesses strongly skewed to AIS usage (accounting for 79% of users, with an additional 7% using both AIS and PIS), versus consumers who are 52% users of AIS (with an additional 8% who are users of both services) and 40% who are PIS users.

Since we last reported in March 2022, the clear shift has been towards PIS, with 50% of consumers active in PIS, up from 38% in March 2022. There has been some shift in small business towards payments, but to a lesser degree. This is displayed in Figure 12.

Figure 12: Split of active users between retail and business, AIS and PIS (Dec 2022). The number in brackets is % change since March 2022.

(Figure in brackets is % change since March 2022)

Successful open banking payments

Open banking payments are becoming important for retail customers as large companies and major institutions roll out these options. These include tax payments, charity donations, the settlement of credit card bills and the funding of digital wallets. A total of 21m open banking payments were reported to the OBIE between September 2021 and March 2022 (see figure 13). In December 2022, there were 7.7m open banking payments, and in 2022 there were 68m payments. This represents growth of significantly more than 100% year on year.

Figure 13: Number of successful payments

Source: OBIE analysis of CMA9 data submissions.

Note: Successful payments initiated by third party providers using Open Banking API, based on data submitted by account providers (ASPSPs) to open banking. There is no data prior to July 2020. Includes data from nine providers and 19 brands.

For comparison, we can show open banking payments as a percentage of overall Faster Payments Single Immediate Payments. This shows that open banking payments now represent around 2.8% of these payments. See Figure 14.

Figure 14: Open banking payments as a % of Faster Payments Single Immediate Payments

Source: OBIE analysis of CMA9 data submissions and Pay.UK statistics on Faster Payments.

We can also draw some interesting observations on the number of payments made by open banking users. In December 2022, there were 2.96m active payments users and a total of 7.7m payments, suggesting that on average an active customer is making 2.6 payments during December. Additional research would be useful to understand whether this suggests a degree of satisfaction or habit forming among these active users.

"In December 2022, there were 2.96m active payments users and a total of 7.7m payments, suggesting that on average an active customer is making 2.6 payments during December."

Overall shape of the open banking ecosystem

The OBIE has some data on API calls which enables us to broadly estimate what type of service users are engaging with or which types of payments they are making. This data is directional only and should be used with caution. However, it does show some interesting patterns. We have overlaid it with the PSU data presented earlier in figure 15 below:

Figure 15: Open banking ecosystem overview – users and API volumes (December 2022)

Source: OBIE analysis of CMA9 data submissions. Note: this analysis is directional as it is not always possible to allocate API calls or payments to a proposition or outcome area. It should be used with care and will be subject to revision as new data is received.

On the SME side, we know that data usage dominates, and cloud accounting propositions are the key driver within this sector, representing the vast majority of API calls. SME payments remain small.

On the consumer side, data services see a very strong dominance of API calls related to financial decision-making services, mainly personal finance manager solutions or account aggregation offerings (for example, banks offering consumers the ability to view account balances from other banks within their banking apps). This represented around half of API calls in December 2022. ‘Better borrowing’ and ‘Increased savings’ represented most of the rest of the volume of API calls.

It is interesting to compare the number of providers by outcome area with their share of API calls:

The savings and investment services are interesting to note here. This is a less developed proposition in terms of number of providers, but seems to be slightly larger than their counterparts in terms of API calls.

On the consumer payments side, we can see the strong share of account top-ups, representing over half of payment volumes. These are propositions where consumers are moving their own money into another of their own accounts, for example to manage spending or to exchange currency.

The next most significant payment type is credit card repayment, with several large credit cards now offering the option to use open banking payments to settle the bill. Finally, we have goods and services and other types of bill payments, which would include HMRC payments. It is worth noting that this analysis was completed in December 2022, and with the seasonal spike in HMRC payments with the self-assessment deadline we would expect a different picture in January 2023.