OUTPUTS (AVAILABILITY)

Headlines

As of June 2023, there were 151 fully regulated firms with live-to-market open banking-enabled products and services.
This figure has declined by eight since December 2022 due to market withdrawal or acquisition.

The fully regulated market remains dominated by propositions addressing improved financial decision-making (45), expanded payments choice (45) and better borrowing (26).
The availability of products and services offered by agents of regulated TPPs has increased by 36 since the end of March 2022. There were 208 such firms with live-to-market services at the end of 2022.
Most agent propositions are clustered around improved financial decision-making (90), expanded payments choice (30) and better borrowing (35). However, this market sector is highly innovative with unique propositions to meet specific market needs,
Overall, our six outcome areas continue to cover most propositions in the market. We now have 22 participants that fall outside these categories and will continue to monitor this carefully.

Availability analysis – regulated TPPs in the Open Banking Directory

Our ongoing tracking of live-to-market TPPs has identified a small contraction in the numbers with active open banking-enabled propositions. As of June 2023, there were 151 live-to-market TPPs, a net reduction of eight on the number in December 2022. There has only been one TPP new-to-market in this period and nine have left. Of these nine exits, there are a range of reasons why, including companies withdrawing from the market or merger.

We continue to track the mix of propositions provided by TPPs and see a steady reduction in companies offering services aimed at helping customers improve their financial decision-making. In December 2022, there were 49 active services in this space, by June 2023 this was reduced to 45 and press reports indicate further contraction in this space is likely.

In contrast, companies providing payment services and borrowing have seen only minor contraction. There is no reduction in the number of firms providing payment services and just one less firm supporting borrowing in June 2023 compared with December 2022.

We should be careful about drawing too many conclusions from the nine market exits, but it is interesting to note that the exit of the borrowing firm related to supervisory concerns about its lending model. This firm is now in administration. This concern appears very specific to the business model employed by this firm and anecdotal feedback suggests that the use of open banking data to support lending decisioning for consumer and small businesses continues to expand, without any replication of the concerns raised by this firm.

In the area of improved financial decision making, we have looked at underlying reasons behind the contraction in this space and it is hard to draw firm conclusions. However, we do note that a large personal finance management service in the market has very recently3 announced that it is closing its service, suggesting that there may be challenges in finding a sustainable business model for these types of service. However, we also note that a global tech company is adding balance and recent transaction history to its wallet, which suggests we may be seeing a shift in the way such services are delivered to consumers.

We continue to see limited numbers of firms providing savings (seven), advice (five) or switching-based services (three).

We have segmented these TPPs by the type of service they offer, using the six outcome areas identified in the Customer Evaluation Framework (figures 2 and 3). We provide full descriptions of the agreed outcome areas, including examples of propositions allocated to each category, in Appendix 2.

Figure 2: Live-to-market open banking-enabled services, by principal outcome area

3October 2023, therefore, not yet reflected in the numbers above

Source: OBL analysis. Includes live-to-market entities regulated as TPPs only. See explanatory note after Figure 4.

Figure 3: Live-to-market open banking-enabled products and services, over time by type of customer

Figure 4: Live-to-market open banking-enabled products and services, over time by route to market

Source: OBL analysis. Includes live-to-market entities regulated as TPPs only. See explanatory note after Figure 4.

4Notes: this analysis differentiates between AISPs which are offering services direct to customer, versus those which are primarily enablers of other propositions. These are effectively ‘platform AISPs’. This distinction isn’t helpful in payments propositions as a PISP will in many cases be enabling a merchant to accept open banking payments, as well as offering that service direct to customers. We therefore report payments providers separately.

Methodology notes for availability analysis

Firms included: this analysis is based on data collected by OBL on the number of TPPs which are regulated, active in the Sandbox or Production and which have a live-to-market service. Any double counting has been stripped out.

Allocation to outcome area: The 151 entities were analysed using publicly available information (including participant websites and press articles). The analysis identified which of the six outcome areas the primary proposition fell into (see Appendix 1 for full details of the six outcome areas).

Mixed and other: As well as the six outcome areas defined in the Framework Methodology, we used two additional tags. ‘Mixed’ was used where an enabling firm was supporting multiple outcome areas. ‘Other’ was used for participants who did not fit any of the categories. This was rare (eight participants). As the Impact Report progresses, we may need to create new categories for these participants.

We are starting to see some reduction in the number of live-to-market TPPs

In the early roll-out phase we saw strong growth in services: but after plateauing this has now started to decline.

Year to September 2020

GROWTH

Year to September 2021

GROWTH

Period to December 2022

DECLINE

Period to June 2023

DECLINE

We will continue to monitor this trend, particularly in the financial decision-making outcome area, where we saw a net decline of four TPPs between December 2022 and June 2023.

Another interesting aspect of the decline is that it is mainly in the direct-to-consumer space (-7), with no decline in Platform TPPs and only a limited decline in Payments Providers (-1). Declines were evenly shared between consumer, small to medium-sized enterprise (SME) or combined offerings.

Availability analysis – agents of regulated TPPs

A key objective of the Impact Report is to better understand the number and range of organisations using open banking data.

The previous section of the report details the number and range of regulated TPPs live in the Open Banking Directory. However, this only provides a partial picture of firms who are utilising open banking to provide services to their customers. In addition to becoming a fully regulated TPP provider, there are other regulatory routes open to firms who choose to provide open banking services.

New open banking service providers are increasingly choosing to utilise the services of regulated TPPs, rather than become regulated themselves. There are cost and time-to- market advantages of these alternative approaches. See figure 5 for a summary of these options.

"New open banking service providers are increasingly choosing to utilise the services of regulated TPPs, rather than become regulated themselves. There are cost and time-to- market advantages of these alternative approaches."

Figure 5: Three high-level options for launching a service using open banking data

In this report we include data on the second of these categories – agents of regulated TPPs. We are not yet able to provide insights or analysis of other parties.5

Figure 6: Agents of regulated TPPs offering open banking-enabled products and services split by outcome area

Figure 7: Agents of regulated TPPs offering open banking-enabled products and services split by primary end-user type

Source: OBL analysis of live-to-market propositions from agents registered with the FCA.

5As agreements between platform AISPs and other parties are commercially sensitive and not published or reported, there is no market data on the number or types of services in market using open banking data under this model. In contrast, both TPPs and agents of AISPs are recorded in the FCA Register. We have gathered some data from selected platform AISPs, which gives us anecdotal insights into the number and types of ‘other parties’ with services in market using open banking data.

However, we are not yet in a position where we can publish insights into the number or type of such services. We hope to work with the platform AISPs in the market to gather data for the next reporting cycle as this remains a key gap in the availability analysis: for example, many lenders, letting agents, gambling companies and even debt advice providers are likely to be operating as ‘other parties’ and are therefore excluded from our analysis.

This part of the market is highly dynamic, with new firms bringing innovative and differentiated services to market and assessing the commercial viability of their new propositions. This results in churn. Overall, the number of firms acting as agents increased by 36 in the first half of 2023. A breakdown of entries and exits is shown in Figure 8.

Figure 8: Changes in agents of regulated TPPs offering open banking-enabled products between March and December 2022

Propositions offered by agents

Our analysis identified 208 agents of AISPs with live-to-market propositions. As with the propositions offered by directly regulated TPPs, the three most common outcome areas are:

Improved financial decision-making

43%

Expanded payments choice

14%

Better borrowing

17%

Propositions supporting the improved financial decision-making outcome area have always been predominant. The share of these particular propositions has increased from 39% in March 2022. However, there is also a significant growth in number of propositions in the ‘Increased access to advice and guidance’ outcome area (22), including propositions that aim to produce insights on the environmental impact of financial behaviour, or to help users budget, optimise their tax planning or offering personalised financial planning support. In most cases these propositions combine open banking current account data to enrich other data and insights offered to customers.

Unique propositions

This market is a highly innovative part of the ecosystem, with many firms developing unique propositions for specific market needs that do not fit precisely into our current defined outcome areas. Interesting examples of new propositions of this nature that have come to market since December 2022 include:

ALLEGIANT FINANCIAL SERVICES

A claims management company specialising in unaffordable lending claims, and fraud and investment scams. Uses open banking data to assess affordability claims and analyse account data evidence of financial circumstances at the time of lending to determine if the borrowing was unaffordable from the outset. The firm is able to access customers’ banking transactions to determine if there were any warning flags that should have been considered in the lender’s affordability assessment.

BARMAR FINANCE

Offers SMEs flexible finance funding options via a revenue share model that means repayments are directly linked to sales, so that if revenues slow or stop, so do repayments. Uses open banking to access bank account information to validate the monthly revenues generated to determine the repayment.

OPEN BRIX

Uses open banking to allow prospective tenants to share their financial information in order to build a trusted, verified and validated pre-qualification profile that can be presented to landlords as evidence of their ability to pay. This improves applicants’ chances of securing a rental property in a highly competitive market.

PIE MONEY

An app that enables real-time automated tax calculation for individuals submitting self-assessment returns to HMRC. Open banking is used to import income and outgoings across multiple bank accounts, calculate the tax due and file the return with HMRC via the app.

WAGESTREAM

Provides access to employees’ financial insights through their employer. Employees can access their pay prior to payday if necessary, and manage their budgeting, build savings, chat to a personal money coach, and get fairer deals on financial products. Access to earned wages allows employees with varying income to ensure cashflow problems do not impact their financial health. This is particularly helpful for hourly-paid staff with fluctuating earnings.

Availability – conclusions

Our analysis shows that the availability of services by regulated TPPs has again slightly reduced at 151 (vs 159 in December 2022). It appears, however, that the agent market continues to expand, with 208 (compared with 172 in December 2022) live-to-market agent services.

As the structure of the market continues to evolve, we can see a growing trend towards a smaller number of platform AISPs supporting other parties to provide services to end-users as agents.

Evolution of the ecosystem

These alternative regulatory routes to market are providing a vehicle for firms to offer innovative and differentiated services. This is a dynamic market with companies launching services to test the commercial viability of embryonic propositions. For example, 38 new propositions came to market in the first half of 2023.

The other area of activity and development is in the “other providers” market. There is still no accepted data on the number of “other providers” using open banking data, although we continue to estimate that ~1,000 firms fall into this category.