Insight Type: Thought Leadership

With the UK’s financial landscape undergoing a transformation, clear opportunities are being created for better outcomes for citizens and businesses, as well as society more broadly. Perhaps none of these are as exciting as those presented by open banking – and smart data more generally. While much exciting progress has been made in open banking’s seven-year history, 2025 potentially heralds the biggest leap yet.  

Every month the number of open banking users and transactions continues to grow, as more customers and businesses recognise the opportunities, products and services it can provide. The open banking ecosystem is worth £4.1bn to the UK economy and has created over 4,800 jobs. The ecosystem we have collectively created is supporting growth, innovation and – looking ahead – is providing the foundations of a true smart data economy, which can deliver economic benefits across other key sectors such as property, retail, telecoms and utilities.    

This report from global professional services firm Alvarez & Marsal, The Future is Open: Navigating the Next Phase of UK Open Banking, charts open banking’s journey so far and asks industry experts what steps are necessary to ensure its future success.

Download the report

Read expert insights

The new report from global professional services firm Alvarez & Marsal, The Future is Open: Navigating the Next Phase of UK Open Banking, charts open banking’s journey so far and asks industry experts what steps are necessary to ensure its future success.

The report, featuring certain insights from OBL, delves into the current regulatory and legislative frameworks that underpin these developments and explores the future possibilities that lie ahead. These include exciting near-term developments such as the first ‘live’ test case for premium APIs in the UK, with commercial variable recurring payments (cVRPs).

And potentially not much further in the distance is the much-needed diversification of the range of ‘open’ financial data – allowing individuals and businesses to enhance their experience of savings, pensions and insurance products and services via open finance. The Government is also progressing thinking on how to take these lessons even wider, into other sectors of the economy through their smart data agenda.

Underpinning these opportunities is the transition of open banking’s regulatory basis to a long-term framework that will see the transition of a competition remedy to one firmly focused on growth and innovation – as well as opening up other sectors. Enabling this is the Data (Use and Access) Bill – currently advancing through Parliament. This – alongside the regulatory instruments that will follow – will play a critical role in providing the foundations upon which the next phase of open banking will be built.  

Alongside this has been welcome policy direction emphasising the importance of payments – and in particular open banking – to growth. The Government recently published the National Payments Vision (NPV)  that sets out its vision for open banking payments and open finance, citing open banking as having “significant untapped potential”. 

In addition to the NPV, the Bank of International Settlements (BIS) has undertaken several open banking and open finance initiatives through its Innovation Hubs and has launched ‘Project Aperta’ to connect open finance infrastructures across borders.

This aims to demonstrate how seamless cross-border data portability can enhance such activities as trade finance. Opportunities are no longer limited to national jurisdictions, with great opportunities to learn from other markets being presented. The growing potential for collaboration and cooperation between markets paves the way for open banking leaders to expand their horizons, be it domestically or internationally.

“Open banking is in its strongest position yet: data and payments continue to make ground, and consumers and businesses are seeing its benefits in the management of their household and business finances and increased access to affordable lending.

We are committed to playing a constructive role in delivering this agenda, and will continue to work with Government, regulators and the wider ecosystem to make it a reality.”

Marion King, OBL Trustee

Download the report

Read expert insights

This year will be incredibly important for the continued progression of open banking in the UK, following an unprecedented level of growth and delivery in 2024. This has been supported by the ecosystem, the Financial Conduct Authority, the Payments Systems Regulator, and the CMA9, all of whom have enabled the delivery of a public good for UK citizens and businesses.

We ask a range of industry and our own in-house experts to share their views on a range of key developments and areas of focus, for what we believe will be an even stronger 2025.

Hot topics for 2025

Read the full article here

In December 2024 we counted 12.09 million active users of open banking, and a total of 223.9 million payments were made using open banking in 2024 – an increase of 72% compared with 2023. We expect this steady upward trajectory to continue throughout 2025.

The announcement of the Data (Use and Access) Bill signalled clear intent from the Government about the importance of building on open banking’s data sharing principles to deliver a smart data economy worth an estimated £10 billion over the next 10 years. The Bill will enable the introduction of the Secondary Legislation needed to establish the long-term regulatory framework for open banking, putting it on a commercially sustainable footing.

Marion King, OBL Trustee

She continued: “Alongside the National Payments Vision, and the potential it offers to transform the UK’s payments landscape, open banking is in a strong position to support a vibrant fintech sector and economic growth.”

The year ahead for OBL

There’s been excellent progress in delivering the Joint Regulatory Oversight Committee (JROC) programme, which covers key topics such as consumer protection and financial crime in open banking. There will also be greater clarity on the future entity as we move beyond a competition remedy to playing a key role in delivering a smart data economy.

Again, the JROC work on commercial VRPs has delivered significant progress in this regard, paving the way for market choice and innovation, including A2A payments for e-commerce and key economic sectors such as utilities and regulated financial services. 

We are proud that the mandated approach to open banking in the UK has delivered a blueprint for more than 60 other jurisdictions, and will have a keen eye on interoperability in the coming year, as the industry looks to enable world class cross-border data sharing.”

Henk Van Hulle, OBL CEO

As we celebrate Small Business Saturday on 7 December, there is no better time to reflect on the importance of the UK’s 5.5 million small and medium-sized enterprises (SMEs). It’s no secret that these businesses form the backbone of the economy, employing around 50 per cent of the workforce and generating over half of the nation’s turnover.

However, firms and sole traders are often hampered by late payments from larger organisations, a persistent problem that stifles growth and productivity. Recent reports show SMEs are losing an estimated £22,000 per year due to late payments. There are wider implications for the economy too, such as reduced productivity, and roughly 50,000 business closures yearly – largely as result of late payments.

But open banking-powered tools and services – often utilised as part of firms’ cloud accountancy packages – can help alleviate some of the pressure SMEs face in managing late payments, cash flow challenges and even cost-effective borrowing.

And while one in five of the UK’s SMEs already leverage open banking to better manage their finances, there is untapped potential for those other small businesses to use it to digitise operations, reduce administrative burdens, and unlock cost savings.

By enabling secure data sharing between financial institutions and authorised third parties, open banking offers SMEs the opportunity to better manage their finances and cash flow by accessing real-time banking data, giving them a clear, up-to-date view of their cash flow and transforming their bookkeeping.

Accounting software can also automate payment reminders, reducing the administrative burden on business owners and prompting timely payment of invoices.

Leading accountancy firm Xero recently reported that 75 per cent of consumers believe large businesses should be encouraged to improve their payment culture, and 70 per cent would be more likely to buy from businesses that pay their suppliers on time. The integration of open banking and open finance can help shift this cultural norm by providing small businesses with the tools to hold their clients accountable.

By using digital tools to automate invoicing, track payments, and access financing, SMEs can monitor and track payments before they become late, and gain more control over their cash flow.

And as the Data (Use and Access) Bill progresses through Parliament and open banking expands into smart data, building on open banking’s secure data sharing principles to deliver similar efficiencies, businesses can benefit further.

Open finance, the next step in open data sharing, can help to unlock better decision-making for business lending. For example, the Bank of England found that 77 per cent of businesses would rather grow more slowly than borrow indicating that securing loans is time consuming and unsuccessful.

A recent report by the Centre for Finance, Innovation and Technology revealed that more than a quarter of SMEs who risked missing out on credit could get access to finance with enhanced data-sharing, helping to address the decline of traditional SME lending.

Small businesses can share financial data with multiple – and alternative – lenders, increasing their chances of securing loans or credit lines. By allowing lenders to access richer, more accurate data about their business’s financial health, open finance can facilitate faster lending decisions, often offering more flexible and tailored repayment terms.

Small Business Saturday is an opportunity to highlight the brilliant work of our SMEs and support them in every possible way. By advancing the Data Bill rapidly and embracing smart data solutions such as open banking and open finance, we can help create an environment where small businesses are no longer stalled by late payments or inflexible credit, enabling them to grow, invest, and contribute to the growth of UK Plc.

This article also appeared in Business Reporter.

As 2024 draws to a close, it’s an ideal time to take stock of the current status of commercial variable recurring payments (cVRPs) and look ahead to what we are anticipating for 2025. 

The logical expansion of variable recurring payments for sweeping (VRPs) or me-to-me payments (moving money from your current account to your savings account, for example) and retail account-to-account (A2A) payments are cVRPs. These promise to deliver greater control over payments for consumers and businesses and, over time, to deliver different retail A2A products and services.  

Importantly, cVRPs include the ability for consumers to limit the value of any payment from their account, particularly for bills or subscription payments. This can be either the amount per payment, or the total value of all payments over a pre-defined period (a monthly, or yearly cap, for example), offering a flexible alternative to Direct Debits, Card Continuous Payment Authority (CPA) payments, and Card on File payments. 

OBL, Pay.UK, UK banks and fintechs are all collaborating to deliver this innovative new type of payment, with the involvement of regulators too. The publication of the National Payments Vision also demonstrated that the Government has a clear agenda for the future of payments and open banking.     

Nick Davey, OBL Head of Strategy

As the UK payments landscape expands to offer more choice about how customers pay, and how merchants receive payments, we summarise key milestones, for this year and next. 

How premium APIs have become cVRPs 

Premium APIs were always a key next step in the evolution of open banking, leading to a significant change in the products and services that third party providers (TPPs) could offer businesses and consumers. The key difference is that they would operate on a commercial footing that would incentivise ASPSPs to develop, enhance and maintain the APIs, and the services behind them.   

However, the industry has yet to deliver any widespread products or services, and it is clear that the conditions for development haven’t yet been met. A successful market in premium APIs needs the following to be useful to consumers and businesses: 

It is possible to claim that cVRPs are effectively the first open banking premium API that is being centrally developed in the UK. 

However, for cVRPs to provide an effective service to billers and customers there needs to be a robust proposition: What is it? How does it work? What are the benefits to customers? And what protections are there if things go wrong? So, the proposition needs to evolve to offer additional use cases. We have been working on these elements since July and hope to publish the details of a cVRP proposition shortly.   

Bilateral and multilateral agreements  

When OBL and Pay.UK started to develop cVRPs, we weren’t starting from scratch. In 2023, the VRP Working Group published a VRP blueprint which detailed the necessary requirements to get a cVRP product off the ground.   

In parallel, a UK Finance group of ASPSPs and PISPs examined how legal clauses – model clauses -could underpin bilateral contracts in this space.  

These were a great foundation to build upon, and it was agreed that for cVRPs to be a multilateral product, a large number of PISPs and ASPSPs needed to agree to: 

In other words, participants need rules to follow to ensure that there are consistent consumer and biller/merchant journeys, and that there is a clear contractual basis for participants to interact with each other.  

To support this, OBL and Pay.UK have been discussing the policies and requirements that underpin that rulebook with the industry, and relevant regulators. We are currently in the process of creating the rulebook, alongside the associated contract and supporting documents. While we are on the way to delivering the ‘system’ that will underpin cVRPs, there is still a little way to go.  

A commercial system means there will be associated costs and fees, and these still need to be finalised and agreed. There are also likely to be additional requirements revealed as part of the ‘test and learn’ approach recommended in the blueprint.   

For that reason, we have defined a limited set of initial use cases for Wave 1, which will be ‘live’ products and services for regulated industries which already offer strong consumer protection, and where there are experienced billers. These are being finalised, but will include: 

Next steps 

We aim to finalise the rulebook in Q1 2025, after a period of public consultation. That will also require the development and implementation of a commercial model.  We are also considering the different MLA models, how they would be operated and by who, aiming for a period where prospective participants can work to being technically and legally able to sign up to the rules.   

We anticipate that industry will be ready from mid-2025, when participants are able to be part of the MLA, and build and offer cVRPs to those firms covered by Wave 1 use cases and their customers. It could, however, be faster than that, and we are keen to work to ambitious timelines to deliver benefits to businesses and consumers. 

We have set the criteria for success, and will monitor the evolution of cVRPs, make any changes or enhancements required, and will move to Waves 2 and 3 when agreed, enabling more billers and merchants to offer cVRPs to their customers.  

This evolution will include e-commerce use cases – being able to use your account to make a purchase from websites and online retailers, for example, although no decisions have been made as to what and when. Again, the National Payments Vision supports this move into e-commerce.   

The shape of things to come 

We anticipate that consumers and businesses will be using cVRPs next year and beyond, and that it will be the first premium API use case of many. We also look forward to seeing the continued evolution of the UK’s world-leading payments ecosystem to deliver further competition, innovation and consumer choice.  

If it’s October, it must be Open Banking Expo. According to the organisers, 2024 was the biggest show so far, with more than 1,500 people attending the two-day event and footprint up 30 per cent from last year. It had also moved to take up more space at the Business Design Centre, to reflect its expansion into three shows: Open Banking, Open Finance and Smart Data.

The OBL team was, as always, there in force to take part in several of the panels and to meet with the ecosystem, regulators and fintech industry colleagues from the UK and overseas.

Clearly, 2024 has been a pivotal year for both OBL and open banking, with the CMA Roadmap coming to an end, and with all eyes clearly focused on both the future entity, and the future expansion of the industry.

This was reflected in many of the panel discussions and in conversations on the floor. We sum up some of the key themes below:

Regulation

Both David Geale, Interim Managing Director at the Payment Systems Regulator (PSR), and Matthew Long, Director, Payments & Digital Assets at the Financial Conduct Authority (FCA), acknowledged the work of the previous six years in laying the foundations for open banking, and the collaboration that has enabled this.

David highlighted that the adoption base is already in place and that “we are encouraged by industry co-operation and the progression of non-Order work”, while Matthew pointed out the importance of a permanent regulatory footing to continue the work in delivering a public good and that: “Consumers’ lives are getting better, and markets are getting better.”

Payments

In the first Powerhouse Debate, Driving payments modernisation in an Open Banking era, Janine Hirt, CEO of Innovate Finance, highlighted the need for a “specific plan, next steps and priorities” to move the industry, which is potentially worth £328bn to the UK economy, forward. She cited the importance of the Digital Information and Smart Data Bill to enable this, and that it needs to include an element of digital ID.

Charlotte Crosswell, Chair of the Centre for Finance, Innovation and Technology (CFIT), agreed that we need to remove the gridlock, adding that it is important to recognise that payments and data are inextricably linked.

“Payments are driving data. It’s about what payments can do for data and what data can do for payments.”

Charlotte Crosswell, Chair of the Centre for Finance, Innovation and Technology (CFIT),

She pointed out that there needs to be a clear value exchange for consumers for the data that they give away, and urged the industry not to wait for the stars to align before moving forward.

This sentiment was echoed by Andy Sacre, Head of Payments at Monzo, who suggested that the industry just needs to get on with solving customer problems, saying: “It’s about putting the customer back in the driving seat.” He pointed out that Monzo customers can now see their mortgage information in their app, and that the pensions industry shouldn’t wait for the Pensions Dashboard to be delivered to do the same.

National Payments Vision

Jana Mackintosh, Managing Director for Payments and Innovation at UK Finance, outlined the organisation’s vision for the UK’s payments infrastructure and the need for regulatory certainty, stronger public-private partnerships, and strong delivery capabilities.

She welcomed the Bank of England’s discussion paper on payments infrastructure, and proposed a public-private partnership led by the Bank of England to drive necessary changes to the payments infrastructure and to enable the execution of the National Payments Vision. 

She also highlighted that the Government’s new Industrial Strategy Green Paper aims to provide a 10-year plan for high-growth sectors, which includes key roles for the digital economy and financial services. 

Variable recurring payments (VRPs)

VRPs are always a hot topic at Expo, and with VRPs for sweeping (me-to-me payments) now delivered by all the CMA9, the conversation has moved on to non-sweeping commercial VRPs (cVRPs) (me-to-business payments).

With the growth of real-time payments across the globe, cVRPs could be a real gamechanger, putting customers in control of their payments, and letting them benefit from a faster, easier, more cost effective way to pay for goods and services.

Token launched its Annual survey on VRPs and the future of payments, which revealed that 79% of banks believe cVRPs will be beneficial to the overall UK payments ecosystem and that the vast majority of banks also believe cVRPs will provide benefits to their consumer account-holders. It also highlighted, however, that one of the top industry concerns is the lack of a customer protection framework.  

OBL CEO Henk Van Hulle pointed out that OBL is working with the industry to build on the VRP blueprint and UK Finance model clauses work, to set the rules and requirements for cVRPs and develop a multilateral agreement (MLA), which will cover liabilities, dispute management, consumer protection and eventually the commercial model.  He said the organisation anticipates publishing a draft MLA for consultation early 2025.

Fraud and consumer protection

Consumer protection, fraud, and the importance of trust were recurrent themes at the show – the idea of an ‘acceptance mark’ was discussed by some experts, while Innovate Finance’s Janine Hirt called for fraud to be “attacked at source”. With fraud costing the UK economy £1.3bn annually, the industry needs to take the lead on tackling it holistically.

Moving to a smart data economy

Conservative peer Lord Holmes delivered a keynote speech on the vision for a Smart Data economy. He emphasised the societal and economic impact of a truly data-driven society, and the importance of collaboration in achieving an inclusive system that is fairer for all. He also cited the benefits of bringing open banking to the public sector, with HMRC collecting £30bn in tax payments and £13bn in NS&I savings payments through open banking.

He said: “The real power, the real change to individuals’ lives, will only come if we all work together, to connect, to collaborate, to co create.”

A smart data economy [will be] good for our communities, good for our cities, good for our country, good for our interconnected world, and in short – justice – it’s our data, our decisions.”

Kevin Hollinrake MP, Shadow Secretary of State for Business and Trade

A panel then followed on the Government’s Digital Information and Smart Data Bill. Panellists were in agreement on the importance of defining clear, compelling use cases that will push the agenda forward. Shadow Secretary of State for Business and Trade, Kevin Hollinrake MP, and the Department for Business and Trade’s Head of Smart Data, Agnieszka Scott, both urged the audience to respond to the Government’s Industrial Strategy Green Paper.

Kevin commented: “You need a coalition of people as broad as possible to support the use cases, and keep banging on [the Government’s] door until it happens. Go and tell them what you need.”

Conclusion

OBL CEO Henk Van Hulle delivered a closing keynote speech and took the opportunity to share the latest user, payment and API data, all of which continues to grow.

He then went on to comment on the way ahead: “All eyes are now on the future as we look to transition to a future entity that creates a pathway beyond open banking to open finance and smart data… the three main themes of this year’s OB Expo.

“What has been apparent in many of the panel discussions is that markets can move while we wait for legislation and regulatory decisions, and all the ecosystem players are testament to that. So let’s keep the momentum going at this pivotal time.

Henk Van Hulle, OBL CEO

“Keep on innovating and continue to deliver the best outcomes for consumers, citizens, businesses and make the UK a better society and economy.”

The Open Banking Limited (OBL) team was in Birmingham this week at Conservative Party Conference, where we co-hosted a panel discussion with Business for Net Zero (B4NZ), focusing on unlocking the data economy. 

Setting the scene 

Kicking off the discussion, Chair and Trustee Marion King shared her insights on how open banking can be used to unlock the vast potential of the data economy. These range from access to green energy, achieving net-zero, and giving users the ability to truly understand their economic situation. 

The event was very well-attended, and we were delighted to be joined by Paul Scully, former Minister for Tech and Digital Economy; Hannah Cool, COO of B4NZ; Emma Pinchbeck, CEO of Energy UK; and Sheree Howard, Executive Director at the Financial Conduct Authority. 

Opening the discussion to the rest of the floor, Paul Scully welcomed Marion’s comments.

It is no accident that the UK has more unicorns than France, Germany and Sweden combined. This is possible because of initiatives such as the pioneering work of open banking.”

Paul Scully, former Minister for Tech and Digital Economy

Highlighting open banking as a public good, Paul championed the work of the previous six years, referencing the support by the previous Government into the open banking framework. He then focused on what lay ahead for the industry, stating that “the next step for the ecosystem was moving from open finance to energy”, advising that this will require strong political leadership from the Government. 

The role of regulation in markets 

He pointed out that the next steps to achieving this change should involve “nudging rather than directing”, because “good regulation creates markets”. 

Emma Pinchbeck agreed with this assessment, explaining to the audience that the UK can tend to “over-regulate rather than under-regulate” in the energy sector, which can stifle innovation.  

Moving to an international focus, the discussion then turned to the rest of the world, where India — Paul highlighted — has moved from a largely unbanked population, where only 8% of the population had bank accounts, to 80% today. This is “due to strong political drive” to improve access to banking services.  

Sheree Howard agreed with Paul’s sentiment that we must be aware of international competition and that a strong political drive is needed, with other countries now catching up with the UK. She continued that, despite this, the UK remains “committed to driving growth and innovation” and is still considered a global leader within the ecosystem.  

Marion agreed that this was reflected in HMRC collecting over £27 billion of taxes through open banking, saying that where strong and good regulation is provided for, significant progress and achievements are made. This was a clear example of “utilising open banking to allow payments to flow”. 

Summarising the lively discussion, Marion highlighted the successful completion of the Roadmap for Open Banking, demonstrating the effectiveness of clear milestones and standards in driving financial innovation. She paid credit to the CMA9 for implementing the CMA Roadmap, speaking highly of how the “infrastructure works incredibly well” along with the positive relationships across the UK financial sector. 

This positive panel discussion on the benefits of smart data underlined what could be learned and leveraged from open banking and achieved in the energy sector, highlighting the economic advantages they can bring to the UK. All panellists acknowledged the importance of the Digital Information and Smart Data Bill in advancing the UK to a successful data-driven economy.  

Echoed in our discussions throughout the week with Conservative MPs, advisers and the Shadow frontbench, OBL highlighted the significant progress of smart data. We also outlined what lies ahead for the economy if we apply the same successful ingredients of open banking to other sectors. 

Last week, Open Banking Limited (OBL) held its latest regional visit in Edinburgh as part of the wider FinTech Scotland festival.

Hosted in partnership with Fintech Scotland, which aims to boost the fintech economy through innovation, collaboration and inclusion, the roundtable brought business people, fintech experts and business leaders together for a productive and future-focused discussion.

The wide-ranging discussion set out the need to fast-track the Digital Information and Smart Data Bill through the UK Parliament, how open banking can help consumers and businesses with everyday financial services, and how to encourage the adoption of secure data-sharing schemes.

A large part of the discussion focused on how industry can effectively communicate the benefits of data-sharing to consumers, such as streamlining time-consuming activities such as mortgage applications and borrowing which, in turn, can offer wider access to finance, cost savings and efficient money management.

Henk Van Hulle, OBL CEO, outlined the success of open banking to date: “Today, we’re at 11 million users, six and a half years young, and this is a very young sector: from open banking, open finance and open data to open everything. The industry is worth £4 billion to the economy, and one out of seven consumers and one out of five SMEs are now using it.”

Looking ahead, Henk said, “We believe that in the future, you will have a whole series of schemes, data sharing schemes, it could be payment schemes, as well as other, different, schemes.”

“We know open banking, and open finance, is an important topic for us as we think about future innovation, and we know the industry are very thoughtful about that as well.”
Nicola Anderson, CEO at Fintech Scotland

One key topic was the important role that open banking and open finance can play in the home-buying process and the mortgage journey.

Martin Leonard, Chief Commercial Officer at mortgage valuation platform Dashly, highlighted the important role open banking data has played in enabling affordable lending, particularly to the financially vulnerable.

He went on to explain that, similarly, securing a mortgage involves long fact-finding sessions, but that using other property-related data points, from credit bureaus, for example, can speed things up for both consumers and lenders. He also emphasised the importance of continued collaboration between banks and credit bureaus to streamline the mortgage application process.

Avril Fiddes, Portfolio Lead, NatWest Bank of APIs, focused on the customer experience and consumer demand. She said: “Perhaps the missing part of the jigsaw is the consumer demand, pushing the industry to go faster, to collaborate more, to deliver more.”

“…Part of the communication challenge we’ve got is to step away from acronyms and actually tell people, ‘wouldn’t it be great if you could get your mortgage approved at five clicks’?
Who wouldn’t sign up to that?”
Avril Fiddes, Portfolio Lead, NatWest Bank of APIs

Adam Betteridge, Partnerships & Open Banking Lead at TSB Bank, highlighted the challenge around consumers understanding the value exchange for data, suggesting that if some of the major banks came out with a TV advert for an open banking service in the next couple of years, it would help bring the financial innovation to life.

He also pointed out the importance of open banking for businesses.

“We’re really interested to see the growth from the small business sector – and work with innovative start-ups which can greatly boost banking services for consumers. TSB’s Edinburgh-based Innovation Lab currently has 13 open banking fintechs that are launching their solutions with us.”
Adam Betteridge, Partnerships & Open Banking Lead, TSB Bank

Tina Harrison, Professor of Financial Services Marketing and Consumption, Edinburgh University, said: “I’d also like to think about the ongoing relationship with customers, something we’re thinking about with [alternative lender] Salad Money.

They have that data for a period after they’ve made a loan to their clients, and thinking through the consumer duty lens, are there ways in which that data could be used to proactively engage with customers over time? For example, if you start to see changes in their financial circumstances, and how that data can then help to improve the relationship and the circumstances of those clients?”

She also pointed out that many credit unions also use open banking for credit decisioning.

Nicola Anderson went on to explore future opportunities for open finance and smart data in the wealth management and pensions sectors, before summarising the session’s key strategic asks: digital identity, the mortgage journey, and consumer communication.

Meeting local politicians

While we were in Scotland, the OBL team was also pleased to meet with Miles Briggs, Scottish Conservative and Unionist Party MSP for Lothian, Christine Jardine, Liberal Democrat MP for Edinburgh West, and Ben Macpherson, Scottish National Party MSP for Edinburgh Northern and Leith, to discuss the value of open banking and smart data schemes to the wider economy. The team also has a meeting scheduled with Chris Murray, Labour MP for Edinburgh East and Musselburgh.  

It’s clear from our latest visit that Scotland is continuing to play a leading role in building a thriving UK fintech sector and delivering many of the tangible benefits of open banking to consumers and businesses in the country.

OBL would like to thank all attendees at the roundtable for their time and expertise:

The Open Banking Limited team were in Liverpool this week at Labour Party Conference, Labour’s first conference in government since 2009. The overarching themes of the conference focused on the economy and setting out its key missions in government. Championing growth, the role of tech, and housing took centre stage throughout the conference, with a recognition that this was the beginning of a long road ahead. 

Our well-attended panel event, Open Banking to Open Energy: Unlocking the data economy, held in partnership with SME4Labour and Business for Net Zero (B4NZ), highlighted the importance of open banking as a tool to unlock the smart data economy.  

Blueprint for open energy 

Henk Van Hulle, OBL CEO, opened the discussion by describing the core ingredients of open banking and how they can be applied as a blueprint for ‘open energy’. Henk outlined the success of open banking, which now counts nearly 11 million users, and how smart data schemes can bring a range of benefits to businesses, before opening up the discussion to the rest of the panel.  

We were delighted to be joined by Sheldon Mills, Executive Director, Financial Conduct Authority; Elena Pérez Celis, Head of Policy and Public Affairs at B4NZ; Gavin Starks, Founder and CEO, Icebreaker One; Cllr Geoff Barraclough, Cabinet Member for Planning and Economic Development at Westminster Council; and David Burton-Sampson MP, soon to be Chair of the APPG on Open Banking and Payments, who moderated the discussion. 

Gavin Starks outlined his work so far through his role as co-Chair of the Smart Data Council: “It has been incredibly encouraging. We’re seeing secondary legislation in development and we’re seeing regulators moving.” 

He then went on to explain the true aim of smart data schemes – putting customers and businesses in control of their data. The true value of open data can be seen through the experiences and advantages it delivers to society.

Ultimately, we’re making data portability for every person and every business in the country. And we’re giving the rights to those individuals and those legal entities to have better control over how they can use their information. It puts the rights back in the hands of the user.

Gavin Starks, Founder and CEO, Icebreaker One

The discussion then turned to the practical roles open banking and smart data can play in society, with Sheldon Mills noting the UK’s current world-leading position: “We are at an excellent point here in the UK… in terms of the number of users, the number of API calls and the quality of those. And the UK can continue to be ahead if we get a few things right.” 

How the UK can retain its world-leading position 

Explaining to the floor that countries such as Brazil are racing ahead with open finance, Sheldon championed open data schemes as a key part of ensuring the UK retains its leading position in this space. Calling for a national strategy, including improving digital identity, he stated that we need to improve regulation to truly unleash its potential.

You can’t have a digital economy if you can’t prove who you are easily and simply. We need to crack digital ID, I think that’s an important underpinning.

Sheldon Mills, Executive Director, Financial Conduct Authority

Elena also explained that she believes that smart data feeds into the wider economy as a whole, and is crucial to many aspects within it. 

David Burton-Sampson MP summarised by discussing the high-level benefits of smart data schemes, saying, “opportunity for growth is driven by smart data”, and its role in offering a crucial next step to the evolving machine of open banking.  

Importance of the DISD Bill 

With all panellists championing the new Digital Information and Smart Data Bill (DISD), it was recognised how crucial the Bill is in harnessing data to drive economic growth, improve data sharing in public services, and empowering regulators to move beyond open banking. 

This was echoed in our discussions throughout the week with ministers and newly elected MPs alike, including Small Business Minister Gareth Thomas MP. We continued to press that the revolutionary vision of the DISD Bill would deliver broad benefits and contribute to the Government’s growth agenda, and the need for it to pass at pace. 

With the right political leadership and economic strategy, open banking and smart data-sharing can help to transform the lives of our citizens and businesses, delivering much sought-after productivity gains and economic growth. 

Sustained economic growth

This week’s Labour Party Conference sought to showcase a vision for increased and sustained economic growth across the UK. The Chancellor, Rt Hon Rachel Reeves MP, highlighted this, as she outlined her ambition for growth, identifying investment as the solution to the challenges surrounding it.  

Committing to end low investment “that feeds decline”, she channelled a more optimistic tone in her keynote speech to conference. With Labour insiders and the Chancellor stating elsewhere in the conference that the government will seek to ensure fiscal rules did not block vital capital spending, the Party’s message is clear that the UK is a centre for growth. 

The Centre For Innovation and Technology (CFIT) and Open Banking Limited (OBL) recently published their report, Smart Data: improving SME lending to drive economic growth. The report, based on findings from the SME Finance Taskforce, highlighted how leveraging smart data could support business growth for the UK’s sole traders and SMEs.

Based on CFIT’s 2023 blueprint, which demonstrated how utilising public and private datasets could unlock decision-making on SME lending, the report is a timely reminder of the impact of reduced lending to the UK’s 5.5 million small businesses which face an estimated funding gap of more than £22bn.

The report sets out a comprehensive programme to help energise the UK economy by improving the lending process and experience for both SMEs and lenders.

This plan has the potential to support wider growth that could see more people employed by SMEs, rising SME GDP, and increased tax revenues from small and medium-sized businesses supporting further growth. It’s also why it’s important that the government passes the proposed smart data legislation promptly – it can support investment and help secure future economic success.

Importantly, it only requires limited public spending.

Short-term action plan
The taskforce, drawn from an industry-wide coalition of 40 banks, alternative lenders, and trade associations, proposed a 7-point action plan to unlock SME finance using smart data:

  1. Prioritise the Digital Information and Smart Data Bill
  2. Fund and support an SME “Smart Data Challenge”
  3. Review and improve HM Treasury’s Bank Referral and Commercial Credit Data Sharing (CCDS) schemes
  4. Accelerate reform of Companies House, in particular standardisation and verification of Company information such as directors’ names
  5. Unlock private sector data by providing information from HMRC e.g. digital receipt of VAT owed to match and verify cloud accounting data. In addition, allow greater access to HMRC data for approved organisations
  6. Develop and consult on proposals for an e-invoicing scheme for the UK to align with overseas markets
  7. Enable greater trust in using new specialist lenders e.g., through industry initiatives.

Promptly implementing the above action points could have a positive effect and unlock finance for small businesses. Existing data sources – public and private – can be expanded and verified. Business owners will save valuable time on preparing paperwork for lenders. Lenders, meanwhile, will have access to more, and more relevant, data, and can feel confident in its validity, helping to speed up, or even automate, the decision-making process.

Changes in loan appetite from some banks
It’s important to understand that business lending has stalled, not because of increased risk, but because many traditional lenders have moved into wholesale lending. Corporate lending is now largely provided by new specialist banks and lenders.

However, many businesses and sole traders are not aware of alternative ways for them to access finance, and, if they are declined, often fail to look elsewhere. Those new, alternative, lenders do not necessarily understand how that business operates, so are not always able to quickly access the information they need to understand risk, and to offer competitively priced loans.

Verifying data can help tackle fraud
Having verified and accurate data can also highlight fraudulent loan applications. Fake businesses or firms that deliberately submit misinformation in their applications cause financial losses and administrative problems for all banks and lenders. Smart data can help remedy this and provide more certainty to lenders about the organisations applying to them for loans.

Introducing a scheme or rulebook
Integral to the success of the taskforce’s action plan is better, more open access to data and ensuring that data is verifiable and reliable.

While the report makes specific recommendations that can be individually progressed, the bigger picture requires an entity to act as the catalyst to bring the various initiatives together. This includes providing the trust framework that sets the standards and data quality requirements, as well as enabling access to that data. This entity would play a similar role to that of OBL in the implementation of open banking.

Expanding access to business borrowing is just one of the use cases that smart data can help enable. The entity that operates SME finance standards can scale, and its rules and standards can apply to other sectors, such as utilities, insurance, travel, and logistics to name but a few. SME finance could be the first test case leading to an efficient, cost-effective and flourishing smart data ecosystem.

Nick Davey, OBL Senior Strategy and Policy Lead, and Secretary to the Taskforce

What comes next?
The government and others will need to decide what entity or entities are best placed to take this work forward. But let’s not get ahead of ourselves. Before any existing or future organisation can start work, several important building blocks need to be in place.

As the action plan highlights, swift passage of the Digital Information and Smart Data (DISD) Bill is essential, and OBL is continuing to engage with government, policymakers, parliamentarians and other key stakeholders to support this.

Standardising data and the supply chain
We also need to understand the nature of the public sector and private data that is useful to both SMEs and lenders, and how to standardise it. We also need to understand how the different parties in the data supply chain could act and how to set out the rules and contracts to deliver this. We also need to understand how centralised consent can work to unlock multiple data sources easily and efficiently for SMEs and lenders.

These are all possible and very credible things that can be done, and need to be done, if we are ever going to get real world smart data solutions off the ground.

Read the report

OBL’s UK Open Banking Strategy Summit, kindly hosted by TrueLayer at its London office, kicked off with a bang as Marion King, Chair and Trustee of Open Banking Limited (OBL), announced that the UK can now count 10 million active open banking users.

The summit united the open banking ecosystem to celebrate six years of success and discuss the positive future for open banking, in light of the newly announced Data Information and Smart Data (DISD) Bill.

Panel 1: The Future is Open

The event was split into two panels: the first was a pre-cursor to ‘The Future is Open’ report, a forthcoming report on the future of open banking by consultancy Alvarez & Marsal, which served as live research for the study, due for publication later this year. Panellists were:

The panellists dissected the proposed DISD Bill and acknowledged the long-term challenges as well as the many opportunities for open banking and the ecosystem to capitalise on.

Marion King and Francesco Simoneschi opened the discussions with a brief overview of where open banking stood, landing an impactful message: there’s no blueprint for open banking.

Instead, it’s a collaborative effort where OBL’s trust framework helps the ecosystem flourish under the close supervision of regulators and policymakers. Simoneschi said that it was this very framework that attracted TrueLayer to move from San Francisco to the UK in 2016 and which fuels the company’s optimism for the next eight years.

Van Hulle emphasised the first order of business was to continue protecting the CMA Order and Open Banking Standard, and thanked those businesses that had voluntarily contributed to enable additional JROC workstreams to continue. He stressed the impact that the new DISD Bill would have on continuing to build the ecosystem. While this point was widely supported by the panellists, Boskovich also pointed out that it was vital for “regulators to push on as quickly as possible”.

Sacre pointed out that around six million of Monzo’s customers have used open banking – ranging from sharing their data to get better credit card rates, paying their tax bill, or connecting other bank accounts to their Monzo app so they can see everything in one place. He said, “the traction is really good, and we are seeing growth”.

When looking to the future of open banking, the conversation turned to the potential for the UK to expand standards beyond its geographic boundaries. Van Hulle underlined the importance of interoperability as standards expand internationally and discussed the UK’s initial success with 60 countries using OBL as a model for their implementation.

However, Sacre and Boskovich warned that competing international standards from countries such as Brazil and Singapore have used the UK’s initial hard work to create their own models, and push on beyond this, risking the UK losing its momentum.

Panel 2: Expanding the Horizons

The second session, Expanding the Horizons, featured the following panellists:

Here the debate focused on how the DISD Bill can provide the necessary provisions for the evolution of OBL from an implementation entity into a future entity for open banking in the UK.

Harvey highlighted that the new Labour Government has prioritised innovation, and said that fintech will play a critical part in achieving its objectives. As a result, the DISD Bill is a priority among a packed legislative schedule and HM Treasury has been heavily involved in discussions with the Department for Science, Innovation and Technology and the Department for Business and Trade about its implementation.

Both Jackson and Mind reiterated the benefits of the Bill, and stated their desire for the Government to take a firm grip on the future of open finance. Jackson specifically asked for the Government to lay out a roadmap, illustrating the steps towards “a production line for open finance”, exemplified by the Centre for Finance, Innovation and Technology (CFIT’s) work on open finance use cases for SMEs and the financially vulnerable.

Mind called for detail on the legislative steps for the future entity for open banking and further information from the Government on the wider digital transformation of the UK economy.

Looking ahead to the expansion of open banking into open finance and beyond, Pointon gave advice on how best to manage a coalition of stakeholders – much like the open banking ecosystem. He stressed the importance of ecosystem collaboration, and the sharing of key use cases to ensure everyone is working towards the same direction, creating, as Ryder described, an “open finance mentality”.

Closing remarks

Closing the summit, Lord Iain McNicol, a Labour peer and keen advocate of open banking, gave his view on the future of open banking as well as the benefits that it is bringing to consumers.  

As Joint Chair of the Oversight Board of alternative lender, Salad Money, he cited the example of how the financial institution has used open banking data to lend more than £100m to people who would otherwise be excluded from the traditional lending market. 

As one of the few “non-party political” legislative issues, he pointed out that open banking has garnered support from Parliamentarians, consumers and businesses alike, continuing that there has never been a better time for its continued evolution. With a Labour Government determined to grow the economy and provide the stability needed for greater investment by the ecosystem, he concluded that all that is important now, “is delivering”.

Guest article: Ghela Boskovich, Head of Europe/Regional Director at the Financial Data and Technology Association (FDATA), discusses why smart data legislation is key to unlocking the full potential of open banking in the UK, and why it will lay the cornerstone of future economic success.

Fintech Week London is always abuzz with the latest trends and breakthroughs in the industry. This year was no exception, and the standout topic? Smart data.

Smart data, the secure sharing of customer data with authorised third-party providers, is the unsung hero behind the success of open banking.

Open banking is a testament to the power of smart data: there are over nine million active monthly users, sending over 16.8 million payment transactions in April alone. Since the beginning of 2024, HMRC has collected £3.5 billion in taxes using open banking technology, saving the public purse over £500,000 in bank charges. The open banking ecosystem, valued at more than £4 billion, has attracted significant inward investment and created around 5000 skilled digital jobs across the country.

Open banking has been a first, relatively cautious, step in laying the foundation for a data economy; its impact is a harbinger for what a truly smart data economy can do to maximise the economic value of the UK market for all constituents.

The DPDI Bill aimed to create a world-leading open data economy

The UK’s commitment to enacting smart data legislation through the Data Protection and Digital Information (DPDI) Bill was supposed to be our golden ticket to a world-leading open data economy. This legislation promised to enhance the benefits already enjoyed by open banking users and extend these advantages to other sectors: energy, finance, retail, transport, home-buying and telecommunications. It was weeks away from becoming a reality, however, when the general election was called, the Bill was left behind. 

Smart data’s recipe for economic growth is missing one key ingredient: the enabling legislation. The DPDI Bill would have given the UK just that, but now, without it, smart data sits on the sidelines. This underscores the critical importance of having the next government, regardless of the party in power, prioritise economic growth and innovation by accelerating a standalone bill for smart data.

Smart data legislation is not just another item on the policy agenda; it is the cornerstone of the UK’s future economic success. Prioritising smart data is essential for fostering a competitive market, driving cross-sector innovation, and creating a level playing field for those small- to-medium-sized enterprises (SMEs) that have been consistently left behind in the drive towards coupling finance and technology.

By accelerating a standalone bill for smart data, the next government can ensure that we continue to build on the momentum of open banking and extend its benefits across other sectors of the economy.

To fully realise the benefits of open banking and expanded open finance, we need to move from the current competition remedy under the CMA Retail Banking Market Investigation Order to the Long Term Regulatory Framework (LTRF). This transition will only be possible with legislative backing. The absence of the DPDI Bill – which would have enabled this transition – makes it clear that the next government must step up and champion this cause.

Rallying cry for the future prosperity of this country

Smart data is fundamentally about creating a thriving, competitive market where innovation thrives, delivering tangible benefits to individuals and businesses alike. As we stand on the cusp of a new era, the prioritisation of smart data by the next government is crucial to the UK economy and its growth. This is not merely a call to action but a rallying cry for the future prosperity of this country. Let’s ensure that smart data becomes the driver of our economic strategy, propelling us towards a more innovative and prosperous future.

Ghela Boskovich

Head of Europe/Regional Director at the Financial Data and Technology Association

Following a panel discussion at Credit Week in Wales, Richard Koch, OBL Interim Policy Director, highlights how open banking can support the financially vulnerable, including through affordable lending and flexible variable recurring payments.

Against the backdrop of increases to the cost-of-living, the concept of ‘fintech for good’ has never been more important. Open banking, where customers can consent to share their account data with trusted third parties to find cost-effective products and services, helps to put consumers back in control of their own finances.

Open Banking Limited (OBL) took part in this year’s Credit Week in Wales, the largest gathering of credit professionals in Europe. Here, a wide range of industry experts and firms discussed innovations in the credit sector, and OBL outlined how open banking technology can support the financially vulnerable and those traditionally underserved by financial services.

Welsh fintech is thriving

Wales was a fitting location for this year’s summit. Its fintech sector is thriving, with data from Fintech Wales revealing that financial and related professional services employ around 64,000 people, an increase from 55,000 last year. Alongside a flourishing ecosystem of fintech start-ups, leading digital banks such as Monzo and Starling have large offices in Cardiff bringing jobs and investment to the region.

Although inflation has fallen to its lowest in almost three years, cost-of-living pressures remain. Around 7.4million people were struggling to pay bills and credit repayments in January 2024, down from 10.9 million in January 2023.

While open banking is not a silver bullet, there are numerous ways in which this financial innovation can help support both consumers and businesses. For example, by opening up access to fairer credit for financially vulnerable people. Open banking allows current account data to be used in conjunction with credit bureau data so lenders can make better informed decisions about customers’ affordability. This supports individuals with a ‘thin credit file’ who may otherwise be excluded from borrowing.

Richard Koch, OBL Interim Policy Director

Plend is one alternative lender that uses open banking data when it assesses loan applications. This enables a broader audience to access credit, at more competitive rates, which they may be denied using traditional loan criteria. Plend aims to make loan repayments ‘truly tailored’ to each customer, and to help customers missing payments, or who are in financial difficulty, get back on track. 

Welsh community finance

Plend also works with several community development finance institutions (CDFIs) in Wales and the South-West of England. These include social enterprise Lendology, which offers lending to local authority homeowners; Purple Shoots, which offers microfinance for small businesses and social enterprises; and Robert Owen Community Banking, a not-for-profit that provides loans for businesses, homes and community initiatives in Wales. By providing its open banking technology to these CDFIs, they can extend loans to a broader range of individuals, many of whom would be locked out of affordable credit.

‘Smart’ Direct Debit offers payment flexibility

Open banking has also pioneered a flexible new way to pay bills – Variable Recurring Payments (VRPs) – which work like a ‘smart’ Direct Debit. They safely connect authorised payments providers to their bank account to make payments on their behalf in line with agreed limits, offering customers more control and transparency over existing payment alternatives, such as Direct Debit and card-on-file instructions.

Open banking Payments-as-a-service company Ordo has an award winning partnership with customer-centric lender, Custom Credit, and affordable credit lender, Moneyline, amongst others. Together, they have been lending thousands of pounds to their customers. These loans are tailored to an individual’s circumstances, allowing them to repay on a schedule that suits, rather than fixed regular payments. The flexibility of VRPs means that both the timing and value of repayments can be altered to account for changes in income.

Ordo has also partnered with technology company Eviden to offer FlexiPay, an alternative way for organisations, such as utilities providers, to spot vulnerable customers or those that are in hardship or soon could be, and collect customer payments using VRPs. This enables regular, flexible bill payments from different accounts (such as a savings account) at a convenient time, for example, pay a monthly bill in weekly instalments when there are cleared funds in one or more accounts.

This flexibility can help prevent people potentially entering costly overdraft facilities in the event of an unexpectedly large bill, or a shortfall in income. The technology can also spot vulnerable customers who may need assistance in planning their repayments, before the payment has the chance to fail. And if they need to be directed to further hardship help like benefits or charities, it will triage and send them directly to the right place.

Fliss Berridge, Co-founder of Ordo, commented: “The way we live, work and earn has changed since the 1960s when the Direct Debit and cards were introduced. They were a convenience revolution then, but now they’re slow, rigid and expensive. In a dynamic and constantly switched-on world where everything in people’s lives can be checked and turned on or off with the click of an app, payments and billing needs to step up to help people manage their money better. We love working with our credit and lending clients and utility partners because we see the difference having low-cost, secure and flexible payment capability, informed by banking information and AI, makes.”

“I am pleased to have taken part in this year’s Credit Week to highlight how VRP has already changed the way people borrow and repay credit, making it work for them, the way money should do – not just here in Wales, but across the UK.”

Fliss Berridge, Ordo Co-founder

Credit is a vital tool to enable people to manage their finances. Innovation in the fintech industry demonstrates new and potentially fairer and more effective ways of providing credit, and other financial services. Many of these also expand access to financial services, focusing on fairness and affordability, helping to deliver a public good, both in Wales, and across the wider economy.

Guest article by Sam Seaton, Moneyhub CEO.
Sam explains how open banking and open finance can help some of the UK’s building societies catch up in the innovation race, attract younger audiences, and simplify customers’ financial lives.

Building societies, with their deep-rooted community ties and commitment to member benefits, stand at a critical juncture. Historically, building societies have achieved the levels of customer-centricity that wider financial services have fallen short of. However, the digitisation of financial services, driven by an acceleration in data accessibility and regulatory changes like the Payments Services Directive II (PSDII) and Consumer Duty, mandates action.

With new access to current account, investment and lending data without having to offer these products, building societies have the opportunity to carve out a new niche in a digital world where consumers focus on long-term goals and turn to those that can help them.

As wider financial services embrace the opportunities presented by open banking and open finance, the disparity between those digital offerings versus those of building societies becomes more apparent, and more risky.

We recently sat down with industry leaders from the likes of Nationwide, Skipton, Yorkshire, Coventry, the Building Societies Association, Open Banking Limited and many others to find out about the sector’s digital-readiness as part of our recent report: Digitise or Die: a call to arms for building societies.

Understanding consumer needs

We also surveyed 2,000 British adults, as part of the report, to find out about how they perceive building societies’ offerings against other industries, and other financial sectors, and what people look for when choosing new providers or products. Here’s what we found:

And what’s important to the next wave of building society members?

Consumer expectations and the digital shift

In a world where technology dictates pace and convenience, consumer behaviour in financial services is rapidly evolving. Even Apple® has hopped aboard the payments train with the introduction of Apple Pay®. Younger consumers, in particular, are looking for interactions that are not just digital-first but are also seamlessly integrated into their daily digital lives. For building societies, this marks a critical and urgent call to adapt or risk extinction.

The risks of inaction

Should the sector remain static, there is a real risk of some building societies losing out, as tech-savvy competitors offer slicker services and more customised products. As sector leaders interviewed told us: “I think we’ve fallen behind over the years. We haven’t moved forward quickly enough. But now we’re at a tipping point where we have to move. We need to digitise or die. I would be that strong about it.”

Open banking and open finance represent a transformative opportunity for building societies. This innovation isn’t just about technology; it’s about prioritising the consumer’s right to choose and enabling a higher degree of financial empowerment, which aligns perfectly with the ethos of building societies.

Building societies are championed by members because of the focus on service, mutuality, integrity, and community. However, due to limited resources and budget, some societies may not be best poised to deliver these services through technology as members are coming to expect. It is here that partnership and collaboration is key.

Businesses are having to adapt to the new normal, and open banking and open finance are key to this. The ability to rapidly deploy services driven by customer consent, leverage ecosystems and improve cost efficiencies can all be achieved through platforms outside of core IT, and while preserving scarce IT resources. Moneyhub’s digital mutual solution delivers what building societies have always stood for, but with light-touch software as a service (SaaS) implementation.

Practical applications of open banking for building societies

Improved decision processes

Open banking facilitates access to a wealth of financial data, allowing building societies to make quicker and more accurate lending decisions. This enriched data environment can lead to superior credit risk assessments and more precisely tailored financial products, aligning product offerings more closely with individual member needs.

Expanding product offerings

The insight gained from open banking data may enable building societies to innovate responsibly and at scale. From budgeting tools and personalised investment advice to integrated insurance services, building societies could expand beyond traditional savings and loans, offering products that genuinely match the modern consumer’s lifestyle.

Open finance platforms, in which consumers can connect all their accounts, investments, loans and other financial products, also mean building societies needn’t offer expensive current account products, and could focus on a digital offering that instead aggregates and displays accounts across different providers.

Customer engagement and satisfaction

Thanks to data aggregation and analytics technology offered by open banking and open finance, consumers can see and manage their entire financial world in one place and on one device, with automation and nudges to drive better outcomes. This drives customer engagement, as they needn’t flit between apps or websites to manage their money.

Open finance offers building societies the opportunity to take their member-focus even further.  If you can simplify your customers’ financial lives, bringing everything into one place – and if you can make engaging with you and understanding your products in the context of their wider finances, and putting money away for the future, as easy as it is to book an Uber – you can help foster a happier, healthier, wealthier future for all.

The time is now

The need to embrace open banking is clear. It represents a fundamental shift toward greater transparency, enhanced customer empowerment, and a significant opportunity for technological advancement.

As we look to the future, the challenge for some building societies will be to balance the preservation of traditional values with the integration of innovative practices. By embracing open banking and open finance, building societies can reinforce their commitment to serving their communities while securing a vital role in the financial lives of today’s and tomorrow’s consumers.

Download ‘Digitise or Die: a call to arms for building societies’ here

 

Celebrating milestones is always an occasion for reflection and recognition of progress made. As we marked the 10th anniversary of the Competition and Markets Authority (CMA) and the 6th anniversary of open banking, it’s evident that the UK’s financial landscape has evolved dramatically, with the UK at the forefront of innovation, competition and consumer choice.

Open Banking Limited (OBL) was created by the CMA to bring competition to the market, aiming to deliver more benefits to consumers and small businesses. And indeed, it has succeeded. While progress has taken a steady pace, the journey towards building a robust, inclusive, and sustainable smart data economy is well underway, with open banking laying down strong foundations for future schemes, growth, and societal benefits.

Our latest statistics underscore the impressive momentum of the open banking revolution. In March alone, the volume of API calls surged by 10.6%, with small businesses and consumers increasingly embracing smart data solutions. The number of payments processed saw a remarkable uptick of 15.5%, reflecting growing trust and adoption among users.

There were over 9 million active users of open banking in January, which grew to 9.48 million in March. First-time users exceeded 1 million a month, with 1.33 million new users in January and 1.39 million in March.

Marion King, OBL Trustee

Notably, HMRC’s collection of £3.5 billion in tax payments showcases the tangible impact of open banking, with a 16% increase from the previous year and a nearly 40% surge in transaction value.

Moreover, on the global stage, the UK maintains a substantial lead in open banking adoption, outpacing countries like Italy, France, Spain, and Germany by nearly five times. This international recognition was further solidified when Apple™* chose the UK as the inaugural country for integrating open banking with Apple Pay™, underscoring the UK’s pioneering role in shaping the future of financial services.

The recent release of the Smart Data Council’s Roadmap marks a significant step forward, extending the reach of smart data schemes beyond banking into sectors like telecoms, fuel, energy, pensions, and mortgages. This strategic move builds upon the success of open banking, unlocking new opportunities for innovation and economic growth that will benefit consumers, businesses, and the broader UK economy.

Central to this future are the Joint Regulatory Oversight Committee’s (JROC’s) recommendations for a Future Entity that is built on a commercially sustainable model. This entity will play a pivotal role in leading the way to deliver interoperability, inclusivity, competition, and potentially innovation across smart data schemes, ensuring a level playing field for all stakeholders.

As OBL Trustee, I welcome the clarity provided by JROC’s call for views on the design of the future entity, setting the stage for continued collaboration and investment in our world-leading ecosystem. It is imperative that we seize this opportunity to define the future of open banking in the UK, leveraging the collective expertise and insights of OBL and industry stakeholders.

The next stage in our journey includes the establishment of an interim entity to address non-CMA Order initiatives, alongside OBL’s ongoing efforts to maintain existing standards, continue to monitor performance, and promote innovation and develop the ecosystem further. This period of parallel-running will eventually lead to the long-term regulatory framework and the eventual transition to the future entity, ensuring the continued evolution of open banking and its extension into open finance and potentially beyond.

Crucially, this progress is made possible by the dedication and collaboration of government, regulators, policymakers, innovators, industry groups, and stakeholders, all committed to realising the vision of a data-driven economy that serves the public interest.

Open finance is the natural evolution of open banking, and it should, as with open banking, have the public good at its heart. By staying true to our principles of collaboration, transparency, and innovation, we can unlock the full potential of smart data, delivering lasting benefits to all sectors of society.

As we celebrate past achievements and embrace future challenges, I’m confident that together, we will continue to drive significant progress, shaping a financial services ecosystem that not only benefits individuals and businesses but also propels the UK towards sustained growth and innovation.

*Apple and Apple Pay are trademarks of Apple Inc., registered in the US and other countries and regions.

Last Friday (12 April), Open Banking Limited held its inaugural regional visit in the North East of England ahead of UK Fintech Week. The visit, hosted in partnership with Sage UK, a leader in accounting, financial, HR and payroll technology for small and medium-sized businesses, brought together local fintech firms, business people, fintech experts, and local and national politicians. The visit was part of a wider programme of engagement to showcase the positive impact of open banking across the UK. 

Here is a round-up of the key themes that were discussed at the roundtable.  

Digitising SMEs 

Discussion focused on the importance of digitalising businesses, with a member of Sage UK’s team recognising that businesses that digitise usually do better. This was echoed by OBL CEO Henk Van Hulle, who noted that businesses that digitise themselves ‘as much as possible’ are more successful, and open banking has a role to play in that process. Henk also highlighted that one bank has around 42 use cases specifically relating to open banking — in the areas of pricing, credibility, improving risk, and affordability. 

We also touched on automation, late payments, the role of the government in regulation and innovation, and – critically – creating an atmosphere of trust. 

The importance of trust 

The team at Sage, Richard Newman, OBL Corporate Affairs Director, and Henk all raised trust as a key part of future innovation. The open banking ecosystem cannot thrive, innovate, and compete, without the trust of consumers and SMEs. Because open banking is a trailblazing industry where ‘nobody has been before’, trust is a necessity. In placing it front and centre of the work achieved so far, Henk noted that one out of every five SMEs now uses in open banking in some way. This has helped contribute to a 19% penetration rate – a ‘massive increase’. 

OBL – and the wider ecosystem – must continue to facilitate a culture of trust, helping to eradicate fraud and ensure trust is placed at the heart of innovation. Customer protection, identity frameworks, and commercial frameworks remain a key part of our future plans. 

Henk reminded the participants that our industry is only in its sixth year, highlighting the ‘amazing’ learning curve, where we are only ‘scratching the surface in terms of opportunity’.  

Interoperability 

The same applies to interoperability – in open banking terms, the ability to exchange data between different organisations via a common standard. This is a core principle of open banking, alongside transparency, assurance and accountability, and allows us to look beyond open banking towards open finance and to smart data.  

Appropriate regulation 

Throughout the discussion, there was a strong focus on the role of the Government in harnessing the right balance of regulation and innovation. The key principles to underpin open banking rely on both the legislative framework and the right regulatory environment, Richard noted it is incumbent on the Government to protect the end users and small businesses. Championing the notion that good regulation will drive innovation, he went on to state the right policies, frameworks, and proportionate regulation can help drive the adoption of open banking. 

Conclusion 

The visit was a fantastic opportunity to engage with an organisation that has fully embedded open banking into its service, and with the customers of that service, in addition to other regional stakeholders. It allowed OBL and Sage to demonstrate the achievements of open banking and where this relatively new technology can take us next. What is clear, is that the ecosystem continues to grow, develop, and innovate at every juncture. 

While there is room to grow and develop, it is clear there is no shortage of opportunities – and widespread support – for open banking to take a leading role in delivering a public good, supporting everything from SMEs to individual consumers. 

Attendees: Sage, North East CBI, North East FSB, Satago, Swoop, G W Dick & Co LLP, Sir Alan Campbell MP, Lord Chris Holmes, Sunderland Software City, Ecospend (Trustly), HM Treasury, The Journal. 

At OBL’s recent Parliamentary roadshow, MPs, peers, regulators, civil servants and members of the open banking ecosystem gathered to explore how smart data can be used to deliver the benefits of open banking across key sectors of the UK economy.

It also provided a chance for attendees to meet some of the shortlisted companies for the Department of Business and Trade’s Smart Data Challenge Prize. The challenge has called for ideas on cross-sector use case that harness data from one or more of the following five sectors: energy, financial services, home-buying, retail and transport.

The event included a panel conversation, chaired by John Penrose MP, on the future of open banking and its evolution into smart data. The Data Protection and Digital Information (DPDI) Bill was also a key topic as it will enable the creation of smart data schemes and help kickstart the Government’s  ‘Smart Data Big Bang’. This aims to see the expansions of open banking data to seven additional economic sectors, the five listed above, along with banking and telecoms.

The panel comprised:

Launching the discussion, Penrose commented on the status of the DPDI Bill, expressing optimism that, when the Bill is given a date for the Committee stage in the House of Lords, it will pass with cross-party support. However, Penrose pointed out that while open banking is in a good place in the UK, “we can’t afford to sit still”.

We need “an investable timetable” of the rollout of smart data sectors, and for a central standards-setting body.

John Penrose, Conservative MP for Weston-super-Mare

Counting 9m+ active users

King celebrated the successes open banking has had in its first six years, announcing the latest adoption and payment statistics: 9 million active users and 14.45 million open banking payments made in January 2024. She paid tribute to the efforts of the ecosystem to get this far, citing it as an example of collaboration in action among a large group of industry stakeholders.

However, she added that OBL is now planning for transition that will take us beyond the [CMA] Order and help to unlock the full potential for open banking.

Charlotte Crosswell and Stephen Wright cast their eyes beyond the next step and focused on the long-term development of a smart data economy. Both highlighted the urgency in setting data standards to enable the ecosystem to innovate and open up the economy.

The UK still has a tremendous opportunity to lead some of this innovation and send the open banking providers here out into the world and take our scientists out into the world. But let’s get there quicker”.

Charlotte Crosswell, CFIT Chair

Crosswell added that it is data that will “unlock better outcomes for consumers and SMEs”.

Minister Kevin Hollinrake was confident that the Government would progress the DPDI Bill and fulfil its potential by implementing smart data schemes. To achieve this, Hollinrake made clear the system must be interoperable, a point King was also keen to press. Yet alongside this, he also made it clear he wanted to see HMT move more quickly on legislating for smart data.

International competition

A recurrent theme for the panel was the importance of the UK maintaining its lead in open banking, and setting data standards on the international stage. Penrose asked the panel to name the countries they perceived as the biggest threats.

The US, with its sizeable internal market, is rapidly catching up with the UK, with the country’s Consumer Financial Protection Bureau legislating for the acceleration of open banking to an audience of 150 million people. The panel also cited emerging markets such as Brazil and India, which are beginning to collaborate on cross-border data standards. Any one of these countries has the potential to become the global standard for data sharing, and as Crosswell pointed out, “no one is stopping at borders”.

In order for the UK to maintain its strong lead in smart data, Wright and Crosswell were adamant that a future roadmap should be led by industry, taking a use case approach guiding the way to a smart data economy.

Hollinrake made the case that it was the Government’s role to liberate the data to “drive down prices and drive up service”, then step back and enable competition within the ecosystem to drive further innovation.

King agreed with the Minister, stating that the future entity will help facilitate the liberation and interoperability of data, to allow innovation among the ecosystem to flourish.

It’s clear that, despite lingering concerns about the Joint Regulatory Oversight Committee’s (JROC’s) pace of progress on the future entity, and the temporary pause in legislation, the industry’s ambition, appetite and ability to deliver wider economic growth remains undiminished. The shortlisted start-ups in the room were evidence that the UK is well on its way towards a smart data economy. Indeed, the DBT estimates that commercial opportunities created by personal data mobility have the potential to increase GDP by £28bn. That’s a prize worth waiting for.

This is a pivotal year for both open banking and Open Banking Limited (OBL). It will also be a year of change as we begin to move beyond the CMA Order to a sustainable commercial model, and expand open banking beyond the current regulatory baseline to unlock open banking’s full potential. As Trustee, I welcome the Payment System Regulator’s (PSR’s) ambition to pilot the first ecosystem-wide expansion of this nature.

The pilot to extend variable recurring payments (VRPs) is an essential first step to achieve this. This pilot will be essential in helping to develop the capabilities and expertise in the future entity that will support the new delivery model envisaged by JROC.

I fully support the PSR’s ambition to move us another step closer to unlocking the potential of account-to-account payments as an alternative to cards and the desire to do so at pace.

It is essential that the pilot is established so that we can learn from it and apply those learnings in the future so that it provides good foundations and a pathway to successfully expanding open banking in the future.

As open banking Trustee, I have set out a response to the call for views on the development of VRPs and the proposed pilot. This includes suggested modifications to the PSR’s proposed approach which I consider will improve the prospect of attaining the long-term objectives that both JROC and the industry want to achieve.

Marion King, OBL Chair and Trustee


Key points include:

I am grateful that the PSR has consulted widely on this proposal and is building on the work of the industry-led VRP Working Group that delivered its report last year. It is essential that the follow-on activities deliver against JROC and industry aspirations for open banking.

I thank all those participants and stakeholders who have contributed their expertise and considered views to the consultation so far, and encourage you to continue to participate in this process. Your engagement and feedback are essential in influencing the future of open banking in the UK.

Download the document

Read my detailed response here.

DOWNLOAD >>

As OBL, and open banking, looks ahead to what will be a pivotal year, we cast an eye into the future to see what changes 2024 will bring, and asked the Parliamentarians, ecosystem and industry leaders to share their predictions for this financial innovation. We summarise their contributions below, and you can read the full article here.

As the Data Protection and Digital Information (DPDI) Bill makes its way through Parliament, John Penrose, Conservative MP for Weston-super-Mare, suggests that while the bill does many welcome things to equip the UK for a data-driven world, “The block of smart data clauses are the ones that matter most for our economy. They build on the foundations of our world-leading position in open banking, so we can extend the same approach quickly into other industries too.”

Lord Iain McNicol of West Kilbride comments that: “We need to go faster and further in championing smart data and open banking, which can be achieved through schemes that allow consumers to make better decisions, and enable innovation.

One of the most effective areas of smart data is open finance; through the expansion of provisions into new areas, it will have a greater social impact, and be a true public good.”

Gavin Starks, CEO of Icebreaker One, adds that: “The UK stands at the forefront of delivering a trusted smart data economy, one that not only protects but also empowers individuals, communities, businesses and society. In 2024, by harnessing our collective success, industry experience and policy leadership, we can deliver tangible economic, social and environmental impacts.”

Open data delivering financial benefits for consumers

Tim Rooney, CEO and founder of alternative lender Salad Money, highlights the continued importance of open banking data as part of accurate, more inclusive credit assessments. He adds that the Salad Money is “using open banking to improve access to fair financial products by offering those who may have been excluded by mainstream lenders a different route into fair, affordable credit”.

Scott Mowbray, Cofounder and CMO of money management Snoop, explains how open banking apps will continue to help consumers make more informed financial decisions by providing easier access to information and promoting better financial habits through the intelligent use of data.

Supporting cost savings for businesses and the public sector

At the Federation of Small Businesses, Policy Chair Martin McTague believes open banking has the potential to help small firms become more efficient, by putting their financial data in one place, streamlining tasks such as processing payments, and highlighting financial concerns before they snowball into serious problems.

Jon Bellamy, Senior Partnerships Manager at Xero, points out that digital bank feeds are one way small firms can save time on manually uploading bank statements, while having bank transactions flow directly into accounts software can provide up-to-date data on cash flow that can inform business decision-making.

In terms of the public sector, James Hickman, Chief Commercial Officer at Ecospend, anticipates that the implementation of the Crown Commercial Service’s open banking dynamic purchasing system will help many other government departments to access open-banking driven efficiencies and cost savings.  

Industry and regulatory collaboration is vital

“The Government must provide industry with a clear vision for the future and encourage better collaboration between all parties to accelerate innovation and competition to deliver consumer and business-focused offerings. This will require a sustainable and equitable commercial model.”

Stephen Wright, Head of Regulation and Standards, Bank of APIs NatWest

Fliss Berridge, Co-Founder, Ordo, believes there is a clear desire to catalyse a sustainable model for open banking innovators, and that there are several firms – including Ordo – that will be ready and able to a pilot of premium APIs for VRPs live by 1 July 2024 – as requested by the Financial Conduct Authority and Payment Systems Regulator.

Finally, we hope that our own work with the Smart Data Council will continue to progress wider regulatory initiatives that will deliver the benefits of open banking to other economic sectors such as energy, transport, telecoms, home-buying, and retail, taking open banking beyond a competition remedy to deliver a true public good.

Read the predictions for 2024

Tags, , ,

Against a backdrop of multiple financial frameworks and regulatory initiatives, the King’s Speech and the Autumn Statement signalled the Government’s intent to unlock the full potential of open banking, including its role in shaping the UK’s payments landscape. This was again outlined within the Future of Payments Review (published alongside the Autumn Statement), commissioned by HMT and led by former Nationwide CEO Joe Garner.  

Containing feedback from more than 100 of the UK’s financial institutions, the review highlighted the opportunities to align regulation and industry priorities to ensure improved consumer and retailer choice, and enable a world-leading payments environment for the UK. 

The review demonstrated the positive impact that open banking can have on improving the payment journey and experience. Along with other key organisations and stakeholders we welcome this outcome, which will place open banking processes and capabilities on a secure long-term footing. We explore the review further in our summary below.  

With the Data Protection and Digital Information (DPDI) Bill likely to pass in the new year, the Government has welcomed open banking as a critical driver of the UK’s financial ecosystem – and the review will play a significant part in achieving this. 

As announced in last month’s Autumn Statement, the Chancellor has adopted much of what was recommended in the review, including repealing the prescriptive EU-based payments authentication rules.  

We will also see the Government unveil the new National Payments Vision (NPV), again championed by the review; as a mechanism to drive open banking, the NPV will prioritise and drive the open banking framework to help mitigate fraud and improve the customer experience of digital payments.  

Launched earlier this summer by the Chancellor, the review focused on giving consumers complete autonomy in their choice of payments. The review is broad in scope, covering consumer spending, digital and financial inclusion and exclusion, the streamlining of services, and aligning and prioritising regulatory and industry initiatives.  

World-leading payments environment 
It found that a world-leading payments environment is vital for a world-leading economy and a healthy society, concluding that an economy can only grow with the appropriate payments infrastructure to support it. The UK’s ‘secure, reliable, and resilient’ economy has created the perfect environment for open banking, achieving a dynamic and future-looking banking system. 

We are pleased to have played our part in the review and to see open banking at its heart as a key payment initiation solution.

"A world-leading payments environment is vital for a world-leading economy, and an economy can only grow with the appropriate payments infrastructure to support it. The UK’s ‘secure, reliable, and resilient’ economy has created the perfect environment for open banking, achieving a dynamic and future-looking banking system." Marion King, Chair and Trustee, OBL

With that in mind, the review made strong recommendations that the Government adopt a National Payments Vision (NPV) and strategy. It argued that in doing so, the NPV would outline the sheer importance of payments, both to consumers and the economy, and the highly interdependent nature of the payments arena.

Achieving this will simplify the landscape, fostering a healthy payments ecosystem, and unlocking GDP growth through supporting small business growth, frictionless trade, and fintech innovation. The NPV’s existence will assure a bright future for the ecosystem.

In achieving this, the report argued that open banking should be leveraged to improve person-to-person bank transfer payments journeys. Doing so would mean that the open banking journeys made in Britain would rival ‘the best in the world’.

With the Government taking on board the recommendations and actions outlined in the Future of Payments Review, it is clear that open banking has a key role to play in moving the UK’s financial framework into the future. It will play its part in securing a modern and dynamic financial system and providing a public good for UK consumers and businesses.

Cover image source: Gov.UK

1 December 2023 – Small Business Saturday highlights the remarkable successes of small businesses up and down the UK. It encourages consumers to ‘shop local’ and support small businesses in their area. Many of these businesses are suffering due to cost of living challenges, however, the open banking revolution is making it easier for them to make cost savings as Kevin Hollinrake MP, Minister for Enterprise, Markets and Small Business confirms.

Minister Hollinrake said: “The UK’s small businesses are the lifeblood of our economy, playing a vital role in providing jobs and economic growth. Small Business Saturday is a chance to highlight the inspiring work of our small businesses and celebrate their success.

“Those firms using open banking-enabled services are able to make cost saving efficiencies through reducing late payments, managing their real-time cashflow, accessing cost-effective finance, and streamlining business administration. Open banking is an example of how innovative tech-based solutions can make a real difference for our hardworking SMEs.”

Kevin Hollinrake MP

Small businesses continue to lead the way in open banking adoption, with a record high of 17% of firms now making use of the innovative technology, often through cloud accounting software. The rapid rise in adoption is testament to the power of open banking technology to empower innovation, create efficiencies and reduce costs.

Sometimes, going to America feels like you’re going back in time. You finish your meal in a restaurant, you get the bill and suddenly your bank card is spirited away to be swiped (although not always!). Here in the UK, signing receipts was replaced by chip and pin, which was, in turn, replaced by contactless payments. Now we are on the road to widespread adoption of open banking as a next-gen way to pay, and taking the next step in that journey.

The UK has always been a leader in financial innovation, and open banking is no different – 11% of consumers and 17% of small businesses are already using this powerful financial technology. We know that the average value of an open banking transaction is around £450, taking the total value of open banking payments to around £4.5bn each month. The first six months of 2023 saw double the volume of payments compared with the same period last year.  And a record 9.7m payments were made in June 2023, up 87% on the same month in 2022. 

This is a huge amount and vital to the future of the UK economy. On Black Friday and Cyber Monday, when it is predicted that over half of UK adults will spend £3bn in shops and online, understanding whether this new technology is safe is a pertinent question.  

“Open banking is a safe and secure way for consumers to spend and transfer money. It was designed with protection in mind - it uses the banks’ own secure systems, and there are robust and constantly evolving protections to spot fraudsters.” Richard Mould, Senior Policy Manager, OBL

Payment protection

The categorical answer is yes, open banking is a safe and secure way to spend and transfer money. Firstly, it was designed with protection in mind. Fingerprints, passcodes or face scans are used to ensure only an authorised customer can make the payment, and all the details are shown in the customer’s own banking app.

Secondly, the Financial Conduct Authority (FCA) has regulations to ensure that customers are protected if something goes wrong with any bank payment – not just open banking. As open banking uses the banks’ own secure systems, there are robust and constantly evolving protections to spot fraudsters. For example, your bank might use geolocation checks, and ‘value and velocity monitoring’ (checking the value of transactions and the speed at which a consumer tries to make multiple purchases).

Some consumers may view these as extra and unnecessary steps that can slow down purchases, but safety always needs to be a top priority and the speed is such that most people won’t even notice.

Purchase protection

Open banking is a safe way to pay but how do you know the person you are paying is legitimate? Again, legislation comes to our aid as the Consumer Rights Act requires merchants to treat customers fairly.    

However, when buying things online, consumers need to treat these purchases in the same way as they would in the physical world. If it seems too good to be true, then it probably is! Do you trust the person you are sending money to? Does the website look genuine? This is why it is always best to only buy from trusted suppliers. Card payments do have additional protections, but often these can only be accessed after you to resolve the matter with the retailer. Card protections do incur extra cost for the retailer, which can end up being passed on to you, the consumer.  

Just because open banking is new, it doesn’t mean that it doesn’t have functionality that consumers know and trust – like the familiar Direct Debit guarantee. It is simply a new journey for payments, that results in the same, safe outcomes. 

Last week’s Open Banking Expo in London once again highlighted the remarkable work of the open banking ecosystem in the UK, and beyond. Some of the key themes this year included the UK’s Open Banking Standard and the positive example that it provides to the rest of the world, the importance of trusted frameworks and accessible data. Keynote speaker Lord Holmes advocated for open banking for the public good, and pointed out that: “It is all about the data – that’s the golden thread for open banking, open finance and artificial intelligence.”

For the first time, Open Banking Limited (OBL) supported the ‘Future Stage’ which provided us with the ideal platform to showcase the potential of open banking and how it can deliver benefits across financial services and other economic sectors such as energy, retail, transport, telecoms, water and more.

On the second day, we published our latest Impact Report. Report authors, Richard Koch, OBL Senior Policy Lead, and Daniel Jenkinson, OBL Policy Manager, shared the unique insights on open banking availability and adoption on the Expo’s Main Stage. The report detailed that over 1 in 9 (11%) of British consumers are active users of open banking, along with 17% of small businesses. For consumers, growth in use is driven through open banking apps – most recently, lending propositions and tax apps – while business growth is driven via data, primarily through accounting.

This growth is also evident through the number of payments, which increased by 88% in June of this year to 9.7 million compared to the same month in 2022, and the upwards trajectory continues with further growth of 10.8 million payments made in August. For the first time, additional data from Pay. UK showed that the total monthly value of open banking payments is sitting at around £4.5 billion – a game changer for how payments are made in the UK. While these statistics highlight the progress that has been made in open banking, the team pointed out the importance of unlocking access to all services to drive further uptake and cross-sector collaboration.

“Regulatory pause“

Elsewhere, OBL CEO Henk Van Hulle vigorously refuted any notion that the UK is ‘losing its open banking crown’, reminding the audience that the UK built a well-trusted Standard and ecosystem in just five and a half years, adding that it is taking a “regulatory pause” to learn from other jurisdictions before it accelerates again. He predicted that we will see payments double in just two years.

He praised regulators for the progress so far but urged the industry to step up to make the future of open banking happen, emphasising the need for the Data Protection and Digital Information Bill (DPDI) (currently in report stage) to be passed into law next year.

Heather Xiao, OBL Product and Operations Director, discussed the challenges related to data reliability from multiple sources and praised the UK’s Open Banking Standard and trust framework which helps to ensure the ‘secure’ data sharing within the open banking ecosystem. She also advocated for business models to prioritise customer value and superior experiences.

Consumer protection
Consumer education and protection were consistent themes throughout the two-day event, with near-universal agreement that more needs to be done on both scores.

Richard Mould, OBL Senior Strategy Lead, spoke about this on the lively consumer protection panel, likening the current situation to having two buckets: one for purchase protection, for example, if you’ve ordered red trainers and received blue ones, and one for payments protection, when something goes wrong with the payment, for example, if the funds were sent to the wrong account.

He said there is protection through existing regulation for the former, but that the industry needs to “sort out the plumbing between banks and third party providers”, adding that the Direct Debit guarantee was a good example of how this could work. The former is a policy decision, and we need to think carefully about where the risk lies, how the risk can be controlled and who pays for the protection.

“VRPs are good for everybody”

As with previous Expos, variable recurring payments (VRPs), the pioneering payment instruction, continued to be a hot topic. Jane Moore, Head of Department, Payments and Digital Assets, at the Financial Conduct Authority said that “VRPs are good for everybody” – merchants and consumers – as they increase competition between payment systems, and allow merchants to price goods better.

NatWest added that the industry needed to give customers the confidence to click on a VRP and urged other banks to get on board with commercial VRPs. There was broad (but not universal) agreement that while VRPs are an enabler to escalate growth, and to create an API economy, they need to be mandated across the board.

Overall, the Expo provided a valuable opportunity for members of the open banking ecosystem to meet and discuss the future of open banking as it continues to evolve. It was even suggested that next year the show is re-named to ‘Open Finance’ or ‘Open Everything Expo’!

Since the introduction of the Gambling Act 2005, there has been significant change in the way people gamble, with most now gambling online or through mobile apps. This ease of access has led both the industry and government recognise the need to move with the times to protect vulnerable customers and promote safer gambling.

Earlier this year, a review was launched to ensure that gambling regulation can rise to the challenges and opportunities facing the evolving industry. The resulting White Paper sets out how to regulate the gambling industry in the digital age by presenting comprehensive new measures aimed at making gambling safer while still ensuring consumer freedom.

Problem gambling and indebtedness is an understandable concern for policymakers and the industry. One academic research paper has found that when an individual increases their gambling spend by 10 per cent, what often follows is an increase in the uptake of high-cost payday loans, an increase in credit card use, and an increased likelihood of missing a mortgage payment.

It’s clear that for betting companies to analyse new and existing customers, affordability checks are crucial for safer gambling as they assess a player’s financial capacity before the point at which they allow significant bets to be placed.

Open banking offers a simple, fast and effective way to do this – by allowing for secure use of a customer’s transactional data (with their consent), gambling companies can have a clear picture of an individual’s financial position. We’re pleased to see that the Government’s White Paper has identified open banking technology as an effective solution to affordability checks.

Traditional gambling credit checks are often insufficient in making accurate affordability decisions, and are viewed as arduous and invasive, requiring the production of multiple physical documents such as bank statements and payslips. Open banking-driven checks are frictionless and quick for both customers and operators.

They allow operators to verify the customer’s identity and match their account to the details submitted, providing a comprehensive and accurate view of their finances in near real-time. The benefits are two-fold: consumers can self-impose gambling blocks to prevent further payments to gambling operators, while the companies themselves can set accurate spending caps for that individual.

The real-time data can also recognise and highlight patterns of potentially destructive spending behaviour. A leading online bank has successfully employed a gambling block for its customers, an optional tool which blocks any gambling-related activity until that customer opts to speak to a support team adviser.

One open banking third party provider (TPP) which operates in this space has also developed a pilot platform which can tackle ‘multi-operator problem gamblers’ whereby customers regularly use accounts across several operators – giving gambling companies an earlier and more effective opportunity to build a comprehensive view of the customer’s accounts and offer pastoral support earlier in the gaming journey.

As well as ensuring responsible gambling for consumers, open banking technology can potentially be used to tackle anti-money laundering by providing a complete and accurate view of those opening accounts and pinpointing other accounts they may be opening simultaneously.

A spokesperson for the TPP said:

From our perspective, we’re seeing manifold benefits for gambling companies from the secure access to detailed data that open banking allows – whether it’s combating illegal, fraudulent activity; bonus abuse by botting; or addressing and helping problem gambling.

“The UK Gambling Commission is working on a ‘Single Customer View’ project to share information between operators (as well as other changes), but our worry is this is not going to go far or fast enough. Pinpointing single factors like source of wealth is not sufficient.

“Additional products can crunch data on individuals, behaviours and signifiers allowing the attribution of flags and risk levels to players – both for their own and the operator’s benefit. The value of this increases exponentially once you look across multiple operators.”

It’s clear that open banking technology can play a key role in both providing protection for gamblers and tackling fraudulent activity. By leveraging this technology, legislators can enact measures that promote responsible gambling and safeguard individuals from harmful behaviours and misuse of their products.

Legislators could stipulate that operators utilise open banking insights to provide tailored responsible gambling interventions. We are keen to see – and support – future collaboration between gambling providers and the open banking ecosystem.

Incorporating open banking into gambling regulation underscores a commitment to consumer protection and anti-money laundering. It will enable regulators to foster a safe, secure and more responsible gambling environment while allowing individuals to gamble safely within their means.

Richard Newman, Director of Corporate Affairs, Open Banking Limited.

London, UK, 21 September 2023: Open banking technologies – such as variable recurring payments for sweeping (VRPs) – are key to maximising the unrealised potential of savings this UK Savings Week, said Open Banking Limited CEO Henk Van Hulle. In a climate of cost-of-living pressures where households are feeling the squeeze, the need for smarter saving has never been greater. VRPs for sweeping personalise saving for consumers and businesses alike, finding ways to cut costs and manage finances more effectively.

VRPs are revolutionising the way we save. By allowing businesses and consumers to take control of their savings, VRPs allow us to save smarter and harder.

OBL CEO Henk Van Hulle.

As households grapple with how and where to save in the face of cost-of-living challenges, the benefits to consumers are clear. Open banking apps can tell you if you’re spending too quickly, and where you have spare cash to save. 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, VRPs can unlock smarter savings for thousands of Brits.

As Savings Week comes to a close, the arrival of VRPs for sweeping can also be a game-changer for businesses. By setting up an instruction to monitor their business current account, every time the balance goes over a certain amount, that money could be swept into a business savings account maximising the potential of critical revenue. Against a backdrop of interest rates having risen steadily since December 2021, this could deliver a welcome boost to business finances, with minimum effort, as well as help firms to pay their taxes by setting money aside at the point of invoice collection.

Van Hulle added: “The ground breaking Digital Data Protection and Digital Information Bill, currently making its way through Parliament, will capitalise on the foundational work of open banking to fully unlock a smart data revolution. By opening up competition across a number of key economic sectors, smart data will create benefits to consumers beyond smart savings to the likes of energy, telecoms and more.

“As we look to a future of open finance and smart data, we encourage non-mandated players to continue to take up the opportunities provided by open banking in order to continue providing the best services for their customers.”

For more information, or to organise an interview, please contact Samantha Boyle at Atticus Partners on sboyle@atticuscomms.com

Notes to editors:

1. Open Banking Ltd (OBL) was set up by the CMA9 in September 2016 as required under the Competition & Markets Authority’s (CMA) Retail Banking Market Investigation Order 2017 to fulfil one of the remedies mandated by the CMA following a market investigation into UK retail banking.

2. The CMA’s investigation into the retail banking market (whose findings were published in August 2016) concluded that older and larger banks do not compete hard enough for customers’ business and that open banking should deliver a new, secure option for customers to be able to compare the deal they are getting from their bank.

3. OBL’s role is to:

• Enforce the obligations on the CMA9 under the CMA Order.

• Design the specifications for the application programme interfaces (APIs) that banks and building societies use to securely provide open banking.

• Support regulated third party providers and banks and building societies to use OBL’s Open Banking Standards.

• Create security and messaging standards.

• Manage the OBL’s Open Banking Directory which allows regulated participants like banks, building societies and third-party providers to enrol in open banking.

• Produce guidelines for participants in the open banking ecosystem.

• Set out the process for managing disputes and complaints.

For more information, or to organise an interview, please contact Samantha Boyle at Atticus Partners on sboyle@atticuscomms.com

OBL spokespeople are available on request.

Guest article by Faith Reynolds, Independent Strategic Adviser, urging a swift move from open banking to smart data to help tackle the cost-of-living and support financial inclusion.

Open banking is a necessary and important solution which can help us navigate the cost-of-living crisis.

Open banking-enabled products offer practical tools which help people to manage their money better and, in some cases, can even help alleviate associated mental health problems.

For small and medium-sized businesses, they can help support increases in productivity. But if we’re going to deal with the root cause of cost-of-living challenges in the UK, we need to move to smart data, and move sharpish.

The impact of the cost-of-living crisis is well-documented: inflation rose to a 41-year high in 2022 to 11.1%. The Trussell Trust reported a significant increase in the provision by food banks, and a series of interest rate rises has led to significant increases in housing costs.

The impact is felt most among people on low incomes and with debt. Covid had a disproportionate impact on people in poverty, especially those from certain ethnic groups and women. Cost of living challenges have exacerbated those inequalities, highlighting the importance of giving people tools to help build resilience.

Apps can help the financially vulnerable

A recent study commissioned by Urban Impact on Health shows how useful a variety of open banking apps can be in helping people in vulnerable circumstances understand their financial situation better. Many users reported greater clarity, reduced stress and feeling more ‘grounded’. 

Over £16m goes unclaimed in welfare benefits each year. One fintech platform uses technology to calculate benefits, and has integrated with a leading retail bank to help people access the benefits they’re entitled to. There are other apps which can help people find local grants and other support.

One alternative lender reports that it has been able to lend more than £4m to more than 3100 customers who do not have a credit score and would otherwise be excluded from borrowing. Open Banking Limited’s research highlights the importance of savings apps in creating new savers, and how small businesses are using open banking to improve efficiency and make better decisions.

“Data is central to better decision-making, planning, investment, and prosperity. Open banking has been a proud export. It’s doing good for people – and for businesses. But how much more could be achieved through open finance and smart data?” Faith Reynolds, Independent Strategic Adviser

Raising awareness of tools

But, as the Urban Impact for Health study highlights, more needs to be done to communicate the availability of tools. Many people are still unaware of what’s out there and how the different options can help them. It’s here that ecosystem participants can do more to embed complementary services and signpost effectively. Collaboration is essential.

The cost of housing was also mentioned by participants in the Urban Impact for Health report: “Addressing challenges with housing and earning enough to meet monthly bills were central to many of our participants’ financial, physical, and psychological well-being – ‘you can’t budget your way out of poverty.’”

We won’t solve these underlying issues of inequality without systems change – which looks at moving the relationships to deliver against different goals and outcomes. Widening open banking to smart data and moving towards a more data-driven society is essential if we want to grow economic wealth and reduce inequality – including the regional disparity in wealth.

Sharing energy data

Energy data initiative IceBreaker One learnt from open banking to create a trust framework that would allow stakeholders to share a variety of energy-related data. Its focus was on enabling organisations to share data to retrofit a housing estate to improve energy efficiency and reduce costs for the community of people living in those houses.

In the past, we’ve tended to view the benefits of open banking and open finance through an individual lens: how does it help individual consumers and individual firms? Now, it’s time to re-frame: how does opening up data help us as communities, regions and the UK as a whole? 

Data is central to better decision-making, planning, investment, and growing prosperity. Open banking has been a shining light, a proud export. It’s doing good for people, and for businesses. But how much more could be achieved through open finance and smart data?

Faith Reynolds is an Independent Strategic Adviser on fintech, open banking, open finance and smart data.

The UK government’s commitment to deliver Smart Data legislation through the Data Protection and Digital Information (DPDI) Bill is a significant milestone towards creating a world-leading open data economy. It is an essential piece of legislation that will help extend and build on the benefits already experienced by open banking users to date.  

Open banking is a financial innovation that allows users to share their current account data securely with authorised third-party providers (TPPs). These TPPs can then use this data to offer personalised financial services, including money management tools, access to cost-effective credit, and alternative payments. 

Smart Data legislation will allow the government and regulators to extend open banking and to mandate new Smart Data schemes in other sectors, including energy, telecoms, pensions, mortgages, and insurance. This should create competition and deliver better outcomes for consumers and small to medium-sized enterprises (SMEs) alike.

By using data held by our service and utility providers, consumers will have a holistic overview of their energy usage, finances, and phone and broadband usage and costs, for example. They will also have access to tailored recommendations of products and services that may better suit their needs, potentially finding new deals and offers with alternative providers.

These legislative and regulatory reforms come at a critical juncture when many people in the UK are struggling to meet the rising cost of living. With 15 per cent of people in the UK having no savings, and 18 per cent of UK adults needing debt advice, smarter money management and access to tailored services like open banking and other Smart Data schemes are essential. 

Smart Data is expected to support consumers with protected characteristics such as disability and race, especially those who are also financially vulnerable. It will change the way we look at data, improving individual’s engagement with markets and increasing customer empowerment. SMEs that currently rely on open banking technology to accurately oversee their finances and keep late payments in check, will also get access to the benefits of Smart Data. 

The legislation will provide a foundation for a regulatory framework that should enable new services and products to emerge while protecting the interests of consumers and SMEs. This would lead to greater competition, lower costs, and more choice for customers. It will also aim to integrate an even wider range of financial services, including loans, investments, insurance, and more, moving us closer to realising Open Finance. 

However, the implementation of any new regulatory framework can pose challenges. The good news is that we can learn from the successful approach used for open banking, one that created a centralised implementation entity that delivered a defined Roadmap and focused on fostering collaboration between stakeholders.

Open banking has demonstrated that it’s possible to encourage competition and innovation in the financial services industry while protecting consumers’ interests. 

It is essential to ensure that the benefits of a Smart Data framework are evenly distributed across society. The regulatory framework must include measures to ensure that everyone, regardless of their socio-economic background, can access and benefit from the new services and products that emerge. The challenge lies in ensuring that the benefits of innovation are accessible to everyone. 

It is also essential to progress the Smart Data legislation at pace. The government has worked hard to make Smart Data a reality, but it is now essential for parliamentary time to be dedicated to getting the legislation adopted. Other jurisdictions, such as Australia and Singapore, are progressing similar initiatives, and progress needs to be made if we are to ensure the UK remains competitive and a world leader in this field.  

Other countries are already moving forward with similar initiatives, and the UK needs to act if we are to remain world leaders and build an innovative open data economy. Failure to do so could result in the UK falling behind its global competitors and missing out on the economic benefits of innovation. 

In conclusion, the Smart Data legislation will be a significant step forward in improving consumer outcomes and supporting SME growth. It has the potential to contribute to economic development and promote greater financial inclusion. With the proper safeguards and regulatory framework, Smart Data can transform the way we manage our financial and economic lives and promote greater financial well-being for all. 

Tags

By the time 2022 ended, HSBC, Santander, NatWest, Nationwide, Lloyds, and Barclays (six of the CMA9), implemented and were able to offer variable recurring payments (VRPs) for sweeping – where consumers or businesses move money from one of their accounts to another (‘me-to-me’ payments).

This significant open banking milestone was reached by the open banking ecosystem coming together to collaborate on the launch of this innovative new payment technology in a controlled way.

The result meant that Payment Initiation Services Providers (PISPs) – such as banks and fintechs – could offer their customers sweeping propositions with the vast majority of current accounts in the UK.

Two months later where are we?

In January 2023, just one month after all the firms above went live with the technology, we saw a promising doubling of the number of payments made using VRPs for sweeping functionality. While we continue to work with the rest of the CMA9 to implement VRPs for sweeping, we understand that some major PISPs are now poised to launch new sweeping propositions.

Commercial opportunities for PISPs

VRPs for sweeping represent a compelling opportunity for PISPs, which can offer sweeping propositions to their customers. For instance: 

Benefits of VRPs for sweeping

As consumers and small businesses face a challenging economic environment and increasingly costly credit, VRPs for sweeping can help in the following ways:

Looking ahead to non-sweeping use cases

While only VRPs for sweeping are mandated for the CMA9, many eyes are now on VRPs for non-sweeping. This is a game-changing opportunity which will make repeated payments such as monthly utility bills more convenient and efficient, by varying the payment amount and the account intervals in a way that suits the customer. Last year, one major UK retail bank launched VRPs for non-sweeping with third-party payment providers, partnering with an international food charity and lettings management platform.

The use of non-sweeping VRPs by subscription services will also allow customers more control around repeat expenditure. By seeing what they are committing to, and when, they can avoid falling into the ‘subscription trap’ – paying for duplicate subscriptions or subscriptions they no longer use.

Some retail payment uses may require other functionality issues to be addressed before they can become a reality. A number of these have been flagged in the Strategic Working Group report, The Future of Open Banking in the UK. Examples include the repayment of mortgages and consumer loans (e.g., moving excess funds to help repay debt, shrinking larger debt faster), or funding an investment account, foreign exchange account or a digital wallet.

Christian Delesalle, Head of Participant Support, OBIE, said: “We are delighted to see VRP propositions — sweeping and non-sweeping — moving from theory to practical use, and we look forward to seeing other uses of this new way to pay deliver benefits to consumers and businesses alike in 2023 and beyond.”

In December 2022, the OBIE completed the managed rollout of variable recurring payments (VRPs) for sweeping, marking the final milestone in the Competition and Markets Authority (CMA) Roadmap which brought open banking to life five years ago.

As adoption continues to grow – there are now more than six million active users of open banking-powered apps, products and services – we ask experts from the industry, regulators, and trade associations to explore the opportunities ahead. You can read the complete article here, but here’s a quick summary of their comments:

Janine Hirt, CEO of Innovate Finance, predicts that open banking will continue to transform the payments and lending landscapes and the key role it will play in reducing financial services fraud, while Kate Fitzgerald, Head of Policy at the Payment Systems Regulator, sets out how open banking competition regulation can help users of payments systems, both consumers and businesses.

Nicole Green, VP Product Strategy & Operations at Yapily explains what she thinks will be the game-changing use cases for VRPs for sweeping and non-sweeping.

Helping tackle cost of living challenges

David Fagleman, Advocacy Associate at the Finance Innovation Lab, highlights the role that open banking can play in supporting financially vulnerable consumers and Dr Mike Granleese, Deputy Managing Director, Corporate Reputation at Ipsos UK, explains how open banking data and services can help consumers manage their finances as they face cost-of-living challenges. Independent Consumer Expert Faith Reynolds also highlights how open banking gives providers the opportunity to embed income maximisation tools, to make sure people can quickly access all the support they need.

Business support

Martin McTague, National Chair of the Federation of Small Businesses, believes open banking can support the UK’s SMEs in staying on top of their finances and accessing useful business insights to improve their forecasting.

Simon Cureton, CEO of Funding Options, expects open banking to become a requirement for any form of consumer or SME debt finance, as it offers near real-time transparency of the borrower’s financial position. This can help individuals and businesses to make more informed decisions prior to applying for finance.

Open finance

Looking ahead to open finance, Kevin Floyd, Product Owner Open Banking Channels at Lloyds Banking Group, lists some of the expanded opportunities it offers, these being:

In terms of data, Ghela Boskovich, Head of Europe at FDATA, believes the demand for services that help customers better manage their money in a recession means service providers will want access to more than just payment data, and so savings and lending data will become increasingly important.

This is echoed by Nilixa Devlukia, Chair of the Open Finance Association, who explains that open finance presents an opportunity for consumers and businesses to gain control and visibility of all aspects of their financial lives – savings accounts, investments, loans, pensions, and mortgages.

Looking to the future

In conclusion, OBIE Chair and Trustee Charlotte Crosswell pays tribute to the CMA9, fintechs, regulators, policymakers and other key stakeholders in the open banking ecosystem which have collaborated to successfully deliver this world-leading open banking framework.

Charlotte goes on to highlight that the UK’s position as a global leader in the open banking sector represents a real opportunity for future digital trade and for the UK to share the expertise that made the implementation of our trusted open banking framework so successful.

If it’s autumn, it must be Open Banking Expo in London. Last week saw a vibrant international crowd of fintech firms, banks, service providers, policy specialists and more descend on the Business Design Centre in Islington to talk all things open banking.

Like last year’s event, the mood was optimistic, as the ecosystem and industry acknowledged the considerable progress made, and demonstrated the appetite to capitalise on the momentum to push open banking further into the mainstream.

In his opening remarks, OB Connect’s Chief Strategy Officer Simon Lyons pointed out that use cases will drive adoption, and highlighted some of the technology’s successes so far:

When the Crown Commercial Team integrates open banking as a way to service multiple use cases encompassing AISPs/PISPs in its Dynamic Purchasing System next year Lyons predicts open banking will play an even greater role in government finance.

Business finance
SME finance was a hot topic at the event, and the OBIE’s Ecosystem Engagement Specialist, Connie Castro Feijoo, was part of a lively panel discussion exploring how open banking could better serve the UK’s small to medium-sized businesses.

Simon Cureton, CEO of Funding Options pointed out that businesses applying for credit through its lending platform could see an application for funds approved in 20 seconds, while in some instances it can take just 18 minutes from a business applying to seeing the physical funds in their bank account.

Michael Green, GM, Partnerships UK and EMEA, at accounting software provider Xero cited open banking as a “really important tool” that’s “saved hundreds of thousands of businesses a shedload of time” that would otherwise have been spent on administration.

He added that the real-time insights into cash flow and performance that open banking provides are invaluable when times are tough, as well as the ability to get paid on time. Xero offers a ‘Pay now’ button in its software, and he pointed out that businesses can get paid twice as fast by asking customers to pay this way. This was echoed by Tom Beckenham, founder and CEO of payments portal Comma.

The panel agreed that all these small incremental changes combined could make a big impact on perennial business problems, but that there are still challenges in educating businesses about open banking’s potential, and its ability to deliver improved productivity and financial resilience.

“While we know that 50 per cent of SMEs currently use open banking-enabled services, there’s a lot of work and education to do to get the additional 50 per cent using it as well”. Connie Castro Feijoo, OBIE Ecosystem Engagement Specialist OB Expo, London 2022

Castro Feijoo concluded that “while we know that 50 per cent of SMEs currently use open banking-enabled services, there’s a lot to do to get the additional 50 per cent in as well”.

Variable recurring payments (VRPs)

VRPs were also centre stage, as Tom Greenwood, CEO of Volt, declared that VRPs were sounding the “death knell of Direct Debit”. He said: “If financial institutions and fintechs work together, we have a tremendous opportunity to create a balanced, practical approach that will deliver on the promise for VRP to enhance consumers’ and businesses’ financial lives.”

Elsewhere, NatWest announced that it had partnered with Token to offer the UK’s first VRPs for non-sweeping use cases, and that these payments were made by NatWest customers to international food charity, Charity Right (implemented by GoCardless), and lettings management platform Pink Chilli (implemented by TrueLayer).

Token also confirmed its plans to make VRPs for non-sweeping services available through other UK banks.

Cost of living

On the Open Banking for Good Stage, the increased cost of living provided the backdrop to several debates.

First off was ‘Open Banking and the cost of living crisis. A force for good’, which highlighted some of the key challenges faced by financially vulnerable and excluded individuals.

James Pursail, CTO and co-founder of consumer lending platform Plend, highlighted that using open banking data for credit assessments opens up a line of affordable credit – “smarter, safer loans” – to people who might otherwise not meet the strict criteria required by other lenders, as well as the opportunity to consolidate debt.

David Fagleman, from the Finance Innovation Lab (FIL), pointed out that there is also a “once in a lifetime” opportunity for open banking to “help people get more out of the money that they do have”, including helping people to save (using the open banking tools that are out there), offering a financial guidance service, and offering support for informed pre-arrears on mortgage forbearance.

This echoed some of the sentiments conveyed in the ‘Beyond banking. The future is smart data’ panel. Moderator, Faith Reynolds from FIL, kicked off the session by commenting that while payments are usually the priority for open banking, data sharing is also hugely important for the industry.

Gavin Starks, Founder of Icebreaker One, said that the common standard in the open banking space should also be applied to the energy sector, and that this would greatly improve the affordability of citizens’ energy tariffs and help to reduce bills.

Charlotte Crosswell, OBIE Chair and Trustee, reiterated that open banking can help consumers build a better credit profile, pointing out that it is “expensive to be poor”, and that financial inclusion should be a key driver of the open banking industry. She added that elements of open banking, such as VRPs, can also be a way to address financial inclusion and the ‘poverty premium’.

Conclusion

There’s a strong sense from across the industry – and beyond – that open banking is at a tipping point, and that we need to continue to collaborate to ensure that momentum isn’t lost as open banking transitions to open finance.

Like many organisations, many of the UK’s charities and social enterprises have been hit hard by the pandemic. Nearly two years of on-off lockdowns hit face-to-face fundraising events – a key source of revenue for many charities – and cash donations. Some struggled to retain volunteers, while others faced an increase in demand for their services.

Recent research from The Charities Commission reported that 60% of charities in England and Wales saw a loss of income, and one in four charities with incomes of less than £10k paused their activities completely during the first lockdown.

As charities look towards the post-Covid fundraising landscape, our new publication ‘The charities guide to growth through open banking’, highlights the opportunities offered by open banking payment solutions.

In the guide, we set out how third sector organisations can:

Challenging perceptions

One of the barriers to introducing any new payment or donation method is the perception that it will be expensive and disruptive to day-to-day processes and tasks.

However, the reality is that most open banking applications are free to use and can be up and running within a few hours. All that’s required is an internet-ready device and an internet connection.

How can open banking help cut costs?

Traditionally, a significant portion of donation revenue goes towards individual transaction fees and annual service hosting costs. According to the business website, Startups.co.uk, each card transaction takes a typical fee of between 1-3% meaning processing costs can quickly add up.

In contrast, the cost of receiving payments via open banking tends to be far lower compared with credit or debit cards, online or in-person. This means more revenue going directly to their funds.

There is also often near-instant settlement and access to any money coming in. Thanks to the UK’s retail payments system, Faster Payments, transactions are typically completed within a few seconds meaning donations are on account and available typically more quickly than card-based payments.

What open banking can offer your supporters

Open banking can also present more flexible opportunities to donate, including micro-donations, where donors can opt to round up transaction amounts and give permission for the surplus (within agreed limits) to be transferred to their chosen charity.

The pandemic has also seen an increase in the use of QR codes, and using a QR code on a leaflet, magazine or billboard means a charity’s donation journey can start anywhere, without the need for specialist apps or a point-of-sale machine.

There are some additional benefits of using open banking too.  

Lack of middleman cuts costs and drives donations up

According to the charity platform JustGiving, it has found that, with no middleman, it is seeing savings of 50%, as well as the displacement of more expensive payment options, such as mobile wallets.

And the ability to donate direct – with the knowledge that all the donated funds will be going direct to the supporter’s chosen cause – has, in some instances, led to an increase in donations as well as cost savings.

The average transaction value is almost twice the amount of a regular donation. We feel it’s an indicator people will choose the open banking option when making large donations, for security and fraud reasons.

Oliver Shaw-Latimer, Director of Global Fintech, JustGiving

Shaw-Latimer concluded: “We underline open banking as our preferred [payment] method. It’s quicker and cheaper, it’s mobile-centric, and the flow is smooth. Ultimately, once you’ve picked your bank, you’re set.”

Read the ebook