INTERMEDIATE OUTCOMES (ADOPTION)

Headlines

We estimate that 11 - 12% of digitally-enabled consumers and small businesses used open banking during June 2022.

This figure has increased from 10 - 11% in December 2022.

Consumer growth is slightly higher than business, but business penetration remains significantly higher at 17% (or 1 in 6,) compared to 11% (or 1 in 9) for consumers.

For consumers, payments have become the growth driver in adoption, with data penetration actually declining slightly in the period.

Open banking payments continues to grow strongly: the first six months of 2023 saw double the volume seen in the first six months of 2022.

New data from Pay.UK shows that the average transaction value of open banking payments is around £450, meaning the total monthly value of open banking payments is around £4.5bn.

Open banking penetration

Using data submitted to OBL by the CMA97, we have estimated the penetration of open banking in 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: OBL 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.

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. The overall penetration figure has increased by 0.6% since December 2022, even though the '1 in n' calculation hasn’t changed.

When we reviewed penetration in the last Impact Report, we suggested that there could be a plateauing in penetration at around 10.5%. It now seems clear that the upward progression of increased penetration has returned.

Figure 10: Estimated open banking end-user adoption8

8 Source: OBL 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.

"When we reviewed penetration in the last Impact Report, we suggested there could be a plateauing in penetration at around 10.5%. It now seems clear that the upward progression of increased penetration has returned."

Gap between business and retail penetration has widened

When we break this penetration down by account type, we continue to see that, proportionally speaking, more small businesses (17%) are active users of open banking than consumers (11%). However, we can see that the growth rates are slightly higher for consumers.

Since we published the last report using data up to December 2022, there has been 10% growth in retail users and 5% growth in business users. Looking at growth year-on-year (June 2023 vs June 2022), the growth is 21% for consumers and 11% for businesses.

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

Usage for data versus payments

Using data supplied to us by the CMA9 banks, we can also estimate the use of open banking for data against the use of open banking to make a payment. This shows very clearly the importance of growth in payments in driving overall usage of open banking. Penetration of open banking for data peaked at 6.9% in September 2022 and has since fallen back slightly to 6.3%.

Payments, on the other hand, continue to grow strongly, with June 2023 representing the highest penetration ever at 5.9%. It is expected that payment penetration will overtake data penetration based on existing trends.

Figure 12: Estimated open banking end-user adoption (data versus payments)

Source: OBL 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, split into AIS and PIS usage. Note that due to some users being active in both data and payments individual totals cannot be totalled.

It is important to remember that some users will, of course, be users of both data and payments in any given month.

However, there is an interesting difference between how consumers and businesses use open banking for data and for payments.

When we look at consumers, we see the slight contraction in the proportion of people using open banking for data which has dropped back to 5.7% in June 2023. We can also see that around 1% of consumers are active in both data and payments.

However, the key trend is the significant growth in those using open banking to make payments. In June 2023, 6.0% of consumers made an open banking payment vs 5.7% who had a data connection. The intersection between these two groups (indicated in orange) is 1%.

Figure 13: Estimated open banking end-user adoption (consumers by type of usage)

Business users on the other hand, see a marked skew towards data connections with more limited take-up of open banking payments. In June 2023, 15.1% were using open banking for data sharing, vs 5.2% to make a payment. The intersection is just over 1%.

Source: OBL estimates based on CMA9 ASPSP submissions, corroborated against BEIS, ONS, Eurostat and UK Finance. Represents the % of CMA9 digitally-enabled consumers with active open banking connections in the previous month, split by type.

Figure 14: Estimated open banking end-user adoption (businesses by type of usage)

Source: OBL estimates based on CMA9 ASPSP submissions, corroborated against BEIS, ONS, Eurostat and UK Finance. Represents the % of CMA9 digitally-enabled small businesses with active open banking connections in the previous month, split by type.

These changes can be summarised in the open banking market map, showing how users split between consumer and business, and between the different types of open banking usage. This shows that business use continues to be dominated by data, with 76% of users being AIS only, a reduction of only 3% on December 2022. In contrast, the proportion of consumers using open banking just for AIS has fallen from 52% to 44%.

Figure 15: Market Map of open banking usage (June 2023)

Source: OBL analysis based on CMA9 ASPSP submissions.

Successful open banking payments

Open banking payments are becoming important for retail customers as large companies and major institutions continue to roll out ‘Pay by bank account’ or ‘Pay by link’ options. These include HMRC (which now collects more than 43 types of tax in this way), charity donations, the settlement of credit card bills and the funding of digital wallets and other account top-ups. This year has also seen the government-owned National Savings & Investments (NS&I) accept payments via open banking for the first time.

A total of 54.5m open banking payments were reported to OBL between January 2023 and June 2023 (see figure 16).

Figure 16: Number of successful payments

Source: OBL 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.

"We note that for June 2023 alone, a record 9.7m payments were made, an increase of 88% on the same month in 2022."

Figure 17: Monthly open banking payments (m)

Source: OBL analysis of CMA9 data submissions.

Interestingly, we note that there were 3.8m consumers and businesses making an open banking payment in June 2023, suggesting that the average user made 2.6 payments that month.

The majority of open banking payments are made over the Faster Payments System (FPS), so it is relevant to understand what proportion of Faster Payment Single Immediate Payments (SIPs) are open banking payments. In June 2023 this reached 3.1%.

Figure 18: Open banking payments as a % of all FPS Single Immediate Payments

Source: OBL analysis of CMA9 ASPSP submissions and Pay.UK statistics.

We can also give an indication of the value of open banking payments, using data from Pay.UK, which has been shared for the first time. This shows that in June 2023, the average open banking payment was £468, compared to an FPS average of £829. This indicates that in June 2023, open banking payments represented £4.5bn.

The impact of tax payments in January each year is clear in the increased average transaction value (ATV) for open banking payments.

Figure 19: Open banking payments ATV vs FPS SIP ATV (£)

Source: OBL analysis of Pay.UK statistics.