Insight Type: Guides

Working from home and the growth in home entertainment means that mobile phone and broadband services are now considered by many people to be an essential household utility alongside water, gas, and electricity.

In 2025, around 65 million people in the UK will be smartphone users, while the UK is home to around 28.1 million fixed broadband lines, generating £14 billion worth of revenue.

However, while many consumers and business owners are keeping a close watch on the cost of mobile and broadband services, ‘switching inertia’ – and the complexity and perceived hassle of changing provider – often keeps them locked into pricey contracts.

Our guide explains how open banking and smart data can revolutionise how telecoms services are consumed, managed, and paid for, giving people greater control over their spending and choice of provider.

It also reveals how some telecoms companies are using open banking to streamline billing and collection, and to help financially vulnerable consumers access affordable plans. You can read the guide here.

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Telecoms guide

The role of smart data

The Government’s Data (Use and Access) Bill aims to expand open banking’s data-sharing principles – where consumers consent to share their financial data with trusted third parties to access personalised products and services – to improve competition and choice in sectors such as energy, finance, and telecoms.

It also aims to make it easier for consumers and SMEs to switch providers and tackle the loyalty penalty – the difference between what loyal and new consumers pay for the same service, which costs households around £1,114 a year on their mobile and broadband bills, and mortgages.

Open banking apps can help find better mobile and broadband deals

Open banking-powered money management apps such as Snoop, Emma, and Little Birdie already offer consumers the opportunity to keep track of their bills, flag contract renewal dates, and compare pricing on mobile and broadband services. In some cases, consumers can even switch providers within the app.

“The Bill Timeline in the Snoop app allows users to see upcoming bills and their balances to help them stay on top of their finances. In the ‘switching’ section of the app, users can easily check for current deals on their existing bills and explore other offers. Typical cost savings for broadband services are £200 and around £80 or more for mobile contracts.”

Scott Mowbray, Head of Group External Communications at Snoop

Affordable tariffs

Open banking data can also help people on lower incomes and government benefits access low-cost mobile services. Vodafone’s ‘VOXI For Now’, for example, uses Moneyhub’s open banking-powered eligibility checker to make a quick assessment of customers’ finances and speed up access to the affordable tariff.

Benefits of open banking for mobile and broadband providers

Open banking can also help telecoms providers deliver financial and administrative efficiencies, and in some instances, improve the customer experience.

Offering open banking as a payment option enables providers to streamline some of the administrative burden associated with traditional billing systems, speeding up collections, and helping to minimise the risk of delays.

For example, Virgin 02 Media was the first UK telco to automate the Direct Debit experience through open banking, streamlining the entry of Direct Debit details. Courtesy of a third party fintech platform, customers can auto populate forms via their mobile banking app, without having to key in account details or remember store codes.

While analysing customers financial health in near real-time gives an accurate snapshot of customers’ finances, and enables mobile and broadband providers to effectively assess the risk of offering credit or extended payment plans, reducing the likelihood of bad debt.

Looking to the future

These are just some of the ways that open banking and smart data can revolutionise the telecoms industry. For broadband and mobile providers, it clears a path to cost reductions through automated billing, and improved customer retention.  It can even support fraud prevention, through initiatives such as the ‘Scam Signal’ API which analyses near real-time network data to identify and tackle fraudulent bank transfers.

Meanwhile, consumers and small businesses stand to benefit from more flexible, transparent, and personalised broadband and mobile services, simpler switching and access to more cost-effective tariffs.

Virgin O2 has spoken about the importance of this and the ability of alternative payment methods such as open banking to recover something rather than nothing.

David Cox, Payments Strategy Lead at Virgin Media O2, shared some envisaged open banking end uses, such as cheaper bill payment mechanisms via commercial non-sweeping VRPs; offering services to overseas students without a credit history; or getting some overdue debt money back, rather than nothing.

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In January 2024, research from UK charity Citizens Advice revealed that 5.3 million people were in debt to their energy supplier. Against a backdrop of cost-of-living increases, there’s been a strong focus for UK households, businesses, and public sector organisations on rising energy costs and water bills. Opportunities to reduce the size of bills, and for utilities companies to find more cost-effective ways to manage payments, and accurately assess future payments, are vital.

Open banking is already playing a key role in delivering some of these opportunities and there are  powers set out in the Data Use and Access Bill (formerly the Digital Information and Smart Data Bill), to expand data sharing initiatives. These will provide additional opportunities to unlock innovation, competition, and economic benefits for consumers and SMEs across seven key sectors:

Our guide explains how open banking and smart data can help to transform how energy and utility services are consumed, managed, and paid for. This includes handy QR payment codes, alternative and efficient ways to top up Pay-As-You-Go meters, and affordability assessments for financially vulnerable customers.

Open banking can also offer energy and utilities firms cost savings on some card-handling fees, and administrative benefits, including in one case, reducing a three-week paper-driven process to an online experience of about 7 minutes.

Flexible ways to pay regular bills

The guide includes a case study from Ordo and Eviden, whose FlexiPay payment solution offers a new way to pay regular bills, such as utilities and water bills and is a flexible alternative to Direct Debit and card-on-file instructions, enabling flexibility on the amount and frequency of payments to cover a bill, suiting a customer’s finances, rather than a set amount on a regular fixed date.

This can help customers avoid arrears, and is useful for people such as gig economy workers, who don’t have a fixed income profile.

Energy costs for small businesses

Many of the UK’s SMEs also need more flexibility with their utilities payments, particularly as they are not protected by the energy price cap,  with some spending up to 20% of their total business costs on energy consumption. Our guide explains how open banking applications can analyse financial data in near real-time to assess a business’s spending patterns and energy usage, offering recommendations for less costly utility options based on actual consumption data.

We also look at a new SME energy marketplace, VoltView, which can help SMEs source alternative suppliers. By utilising half-hourly smart meter data, retail tariff data, and credit checks, VoltView’s marketplace can offer supplier recommendations based on their energy profile and access to a repository of relevant grants.

Moving to a data-driven economy

Open banking has highlighted the extensive range of opportunities that can benefit consumers and businesses when customers are put in control of their data. The Department for Business and Trade estimates that commercial opportunities created by personal data mobility have the potential to increase GDP by £28bn.

This is particularly true of the energy and utilities sectors – gas, electricity, water, and fuel – the cost of which is a key concern for many businesses and consumers.

As we move forward under the new government, the implementation of a Data Bill will be crucial in realising these benefits to end-users across various sectors. It will also support the transition to an innovative, data-driven economy.

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Buying and renting a home in the UK can be complex, time-consuming and frustrating – requiring lots of paperwork at different stages of the process before the home-owner or renter can cross the threshold.

A shortage of housing stock and increases in interest rates and rental costs, combined with arduous processes to verify income, can make securing a place to live a serious challenge. There’s a high failure rate too, with around 30% of house sales falling through each year.

However, open banking technology – where individuals consent to share their bank account data with trusted third parties – is already helping to tackle some of the challenges faced by sellers, buyers, landlords, tenants, lenders, and estate agents.

Open banking also offers a secure way to send and receive the large sums required for deposits and exchange.

Our latest guide sets out how open banking can help home-buyers and renters with every step, and explores further ways we can make the process truly digital.  You can read the guide here.

Saving for a deposit

Money management apps can help people build a regular savings habit, enabling them to quickly and easily move money from their current account to higher interest-bearing accounts as they save for a deposit. There is also an open banking-based savings app designed for first-time buyers, which lets buyers open a Lifetime ISA, build their deposit with government incentives and benefit from tax allowances.  

Applying for a mortgage

For most buyers, the paper trail starts with securing a mortgage, and verifying their ability to repay it. This can involve collating several months’ worth of pay slips, bank statements, and bills, as well as proof of identity and address. The application process alone takes an average of four to six weeks.

However, an increasing number of lenders now use open banking connections to validate a borrower’s income, eliminating the need to provide paperwork and reducing the time it takes to complete the verification process from days or weeks, to even minutes.

In some cases, these connections allow buyers to provide additional evidence of a solid financial track record – such as regular council tax payments – to factor into mortgage applications. This can mean more personalised mortgage offers.

Rentals

The increased cost of buying a home has created a highly competitive market for rental properties, with landlords and letting agents often requiring rigorous vetting and up to six months’ worth of rent in advance, on top of a deposit.

This works disproportionately against some sections of the population, particularly the 5 million people in the UK who have a ‘thin’ credit file.

Tenant vetting

Open banking can help with tenant vetting, and affordability checks. Prospective tenants need to provide evidence of their ability to pay their rent (an affordability check), usually by providing six months’ worth of their most recent bank statements and payslips. This is time-consuming for all parties, can take several days, and is a significant administration overhead for landlords and letting agents. However, open banking offers a speedy and cost-effective alternative that can benefit all parties.

Renters can choose to authorise access to their financial data via open banking connections, with some apps enabling the quick categorisation of transactions, giving agents and landlords an up-to-date and detailed snapshot of all their incomings and outgoings. This speeds up the vetting process – checks can sometimes be completed in a single day, helping them to secure their accommodation.

It can also increase the likelihood of approval for some tenants, particularly those who might be excluded by traditional checks, because they can include evidence of income and additional repayments, for example from savings, international sources and subscription services, which can help tenants build their profile and increase their likelihood of acceptance.

There are several platforms that use open banking data to offer one-stop tenant vetting and on-boarding services, pre-qualification and automated document signing.

Initiatives such as the Open Property Data Association also aim to digitise key steps in the home-buying process. The organisation recently released its latest property data standards to make free and shareable data tools available across the property industry.

In the not-too-distant future, home-buying in the UK could follow the Australian market, and be a digital experience from start-to-finish.  

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The UK’s 5.5 million small to medium-sized businesses are the backbone of the economy, accounting for around 99% of the business population. Together they employ around 16.4 million people and are responsible for turning over approximately £1.2 trillion each year.

Yet the past few years have put many SMEs under pressure. There are 82,000 fewer SMEs than in 2020, and those that remain face increasing running costs, difficulties accessing short and long-term finance, and administrative burdens.

Our guide explains how open banking solutions can help address these challenges, including speedy access to cost-effective lending, ways to manage payments, and real-time insights into cash flow that can support business decision-making.

It also highlights some of the ways in which open banking payments and data can help streamline business administration, including eliminating time-consuming processes such as bulk payments, and maximise the value of business savings.

Business borrowing

In December 2022, the Federation of Small Businesses (FSB) published its Credit Where Credit Is Due report, highlighting the difficulty faced by the UK’s small businesses in securing cost-effective finance.

Faced with the often time-consuming process of applying to traditional lenders for funds, many business owners turn to credit cards and overdrafts or use personal borrowing to subsidise their business.

In addition, delays in receiving funds often mean that money arrives too late to address short-term or seasonal funding gaps for many businesses, disrupting cash flow and exposing them to further charges.

While one size does not fit all for SME borrowing, it’s clear that many businesses are unaware of the opportunities offered by alternative forms of credit, enabled by open banking.

By consenting to share their business transaction data, potential lenders can access up-to-date data for credit analysis – rather than historic data – which offers powerful advantages.

Access to cost-effective credit powered by open banking could ease the process of borrowing for smaller firms and help plug an estimated funding gap of £22bn which is slowing growth in this important sector.

Payments in and out  

Offering open banking as part of their payments mix can help smaller businesses to attract and grow their share of customers. Including this can offer the following benefits:

Enhanced payment options – ‘Pay by bank’ options allow customers to initiate payments directly from their bank accounts. This can bypass traditional card payment methods, while offering QR codes as a way to pay is also popular

Streamlined checkout processes – small businesses can simplify their checkout processes by integrating open banking payment solutions into their websites or mobile applications.

Lower transaction fees – by leveraging bank-to-bank transfers, businesses can reduce transaction fees associated with card schemes. For small businesses with lower transaction volumes or those operating on smaller profit margins this can be particularly beneficial.

Improved forecasting and cash flow with open banking

Many small businesses find it hard to get an accurate picture of their current financial position. As a result, it can be difficult to control fluctuations in cash flow, prepare for any unexpected shortfalls and collaborate effectively with accountants and finance professionals. This can hinder future earnings forecasts, slow decision-making on investments, and limit research and development, hindering growth.

Our July 2022 Open Banking Impact Report demonstrated that small businesses are increasingly utilising open banking-driven cloud accounting services to manage their operations, improve efficiencies, access better insights, and drive cost savings.

Including an embedded payments link with invoices can also speed up settlement times, helping to tackle the problem of late payments and improve cash flow.

Conclusion

There are around 750,000 small to medium-sized enterprises (SMEs) using open banking products, many as part of their cloud accountancy packages. We hope this guide will help some of the remaining businesses and sole traders take advantage of open banking and benefit from the cost and time savings it can deliver.

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In the five years since the creation of open banking in the UK, millions of consumers and businesses are using open banking-enabled tools, ranging from budgeting and savings apps to help manage their money, or benefiting from embedded finance links in their accounting software to help them get paid faster.

There’s been significant progress since the start of open banking’s journey. But so far, open banking products have been limited to payments, personal and business current accounts, and credit applications.

As open banking evolves, and we start the journey to open finance, our guide explores its current and potential uses and looks beyond to ‘smart data’ – applying the same data sharing principles to other sectors.

Variable recurring payments (VRPs)

A key part of open banking’s evolution has been a technology called variable recurring payments for sweeping. This lets individuals automatically move money from their current account to another account (‘me-to-me’ payments), such as moving surplus funds into a separate savings account, or using them to repay a loan to cut the cost of borrowing. 

However, as we move beyond open banking, many eyes are now on VRPs for non-sweeping.

These allow authorised providers – such as a utilities company – to initiate a series of payments for their customers (‘me-to-business’) at different intervals, and for varying amounts, instead of paying the same amount each month regardless of what’s owed. Importantly, the customer gets to define these payment parameters, giving them greater control over repeat expenditure than Direct Debit and card-on-file instructions.

Savings

Savings apps are helping many people to build a regular savings habit by ‘sweeping’ surplus funds from current accounts to interest-generating savings accounts, or by rounding up small amounts of change from shopping bills to add to a savings account.

Open finance could see the creation of innovative products allowing consumers to reverse this process, enabling them to maximise the interest they earn by keeping savings in situ, only moving the money to a current account when needed for mortgage payments, rent or other bills.

Mortgages

A growing number of banks and mortgage brokers use open banking connections to validate a borrower’s income, eliminating the need to provide several years of bank statements. The process can now take minutes instead of days.

And one leading UK building society recently announced it would incorporate open banking-driven affordability checks into its mortgage assessments. For first-time buyers, linking their current account payments to their credit score, and providing additional evidence of a good financial track record — such as regular council tax payments — can be factored into mortgage approvals.

Subscriptions

Many households can cut their regular expenditure by reviewing their monthly subscriptions to gyms or entertainment services they no longer use, but cancelling subscriptions isn’t always easy.

While open banking money management apps already help identify duplicate or unused subscriptions, the use of non-sweeping VRPs by subscription services will also allow customers more control over this common repeat expenditure.

Consumers will be able to clearly see what they are committing to and when, so they can avoid falling into a ‘subscription trap’.

Wealth management

Open banking-powered investment apps have brought wealth management services to a much wider audience by combining low fees with a low barrier to entry – one app has a minimum investment of £1.  

With a complete and up-to-date picture of a client’s assets and liabilities, the traditional wealth management sector is also realising how open finance can reduce processing costs and develop personalised propositions across a wide range of incomes.

Pensions

While pensions were not in scope for open banking, the pensions industry is already making use of the technology to, for example, facilitate faster and simpler payments into plans via pensions apps.

One leading UK pensions provider has partnered with an open banking platform to provide its 1.5 million scheme members with real-time data on their spending and saving across a range of financial products. This single holistic overview of all an individual’s finances was part of the original vision for open banking.

Beyond finance – smart data

Open banking has paved the way to ‘smart data’ and is being delivered in part by the introduction of smart data legislation. The aim of this legislation is to help consumers and businesses navigate complex markets and find cost-effective tariffs for utilities such as energy, water, and broadband, potentially saving hundreds of pounds on bills.

Imagine a world where consumers can quickly and easily compare prices, but also facilitate the switch to a cheaper or more relevant product in a single click. For example, downloading mobile phone consumption data to find a better package and have the price comparison site or provider complete the transfer.

As the UK swiftly moves to a smart data-driven economy, we look forward to seeing the many additional benefits and cost savings it can deliver to consumers and businesses.

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We take a look at some of the most common financial challenges and explore how open banking apps and services can help.

Industry predictions for 2023

Can open banking open the door to additional fund-raising opportunities and potential cost savings?