Open Banking innovation is raising customer usage

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Open Banking is predicted to grow to 304 million users by 2026. Merchants, payment service providers (PSPs) and consumers will all benefit from the lower fees, immediacy and increased convenience that Open Banking offers.

What is this article about?
Open Banking is going from strength to strength

Why is it important?
The Financial Services and Markets Bill may impact several parts of the payments sector, from access to cash to fraud compensation.

What’s next?
The Bill has further readings in Parliament and, after possible changes, may become law in 2023.

Open banking, the infrastructure that enables the secure sharing of financial information, continues to grow. The number of successful API calls, a metric measuring the number of operations executed on the Open Banking network, increased from 541.2 million in 2020 to almost 976.8 million in September 2021.

“The payments industry needs to adopt Open Banking payments because, ultimately, it’s going to be a massive part of the landscape,” says John Natalizia, co-founder and CEO at Snoop.

Open Banking has shown us that the financial industry can welcome fresh players, tackle disruption, and bring new value to the consumer. It is sparking competition and innovation in the financial services sector to create better products and experiences for businesses and consumers.

“Open banking is not just about the initiation of a transaction on behalf of a payer,” explains Jan van Vonno, head of industry strategy at Tink. “It is also about innovating around the transaction to create enhanced services for payers and merchants, such as financial management, confirmation of payments, and data-enriched payments.”

Businesses are using Open Banking to manage cash flow or make it easier to receive payments. It provides a safe payment option at a fraction of the cost of traditional methods such as invoicing and card payments.

By providing fast and easy payment experiences for users, businesses enjoy increased conversion rates and sales. With an integrated payment flow, engagement increases as users never need to leave the service. Innovations from payment providers like Volume make the checkout process seamless. This enables merchants to reduce associated fees and pass on savings to consumers.

The government’s plans to unlock the potential of open banking payments, such as through account-to-account retail transactions (A2ART), through the strategic working group overseen by the Joint Regulatory Oversight Committee (JROC) will see further progress. The Payments Association and its Project Open Banking are contributing to the strategic roadmap.

With so much progress expected on Open Banking, van Vonno believes that the industry should adopt Open Banking as it can “provide lower-cost, higher-success payments which settle instantly – a clear upgrade on what has been available to merchants so far”.

Customers are taking control

Open Banking was conceived to improve financial services for customers, such as communicating with various banks to obtain information in one consolidated real-time dashboard. It is a secure way for customers to take control of their financial data and share it with organisations other than their banks.

Sharing data with authorised third parties enables customers to access services that help them make more of their money. As such, Open Banking solutions are safer because they require customers to authorise every payment with their bank using strong customer authentication (SCA). “[I]t is as close as you can get to a fraud-free payment method,” says Natalizia.

From smart savings apps to finding better mortgage rates or accessing credit, customers have better ways to spend, borrow, and invest. They can also benefit from reduced overdraft fees, improved customer service and the ability to build their credit scores and prove their ability to repay loans without having to rely on what banks and credit agencies know about them.

Open Banking is expanding to include savings, mortgages, wealth management, and other financial services and customer account types. With increased adoption, the industry can move from Open Banking to Open Finance. More data sources, such as utility data and mobile phone data, can become available. This will deliver more personalisation and value to consumers.

As fintech continues to develop, the payments industry can benefit from:

  • Improved Open Banking products that are advantageous for businesses to offer, compared to legacy payment methods; and
  • Open Banking payments being more widely available.


With the variety of uses, Bottomline’s General Manager and Director of Payments Ed Adshead-Grant says that the range of use cases vary enormously. “From better customer budgeting and financial awareness to seamless payments in real-time, affordability assessments on new customers, onboarding checks on everything from new savings accounts to property landlords who want to do background financial checks,” he says.

John Natalizia, co-founder and CEO at Snoop, agrees with Adshead-Grant. “From our perspective, it is the ability to help consumers use their data in an intelligent way to make money [management] bespoke and personal, not one-size-fits-all and transactional. This personalisation results in more control, improved financial capability and better financial outcomes for customers,” he says.

For example, Open Banking has enabled PensionBee to create pension calculators and retirement forecasting tools to help customers plan. App users can also move their money between pensions. Before Open Banking, it was difficult for customers to locate pensions and data wasn’t easily available.

Last word

Adshead-Grant believes the winners of Open Banking will be those who “embrace the new change of open economies, where something that began as a compliance project in many countries can now evolve into a competitive position to win and keep new customers who want to operate in a digital world”.

Open Banking is predicted to grow nearly 680% by 2026 to 304 million users. By September 2022, the UK counted 6.57 million monthly active Open Banking users among the nine largest banks.

Van Vonno believes this is only the starting point. “In June, Tink predicted that this number will go over 10 million by the end of 2022,” he says. “It is being driven by three unique forces: the introduction of re-confirmation of consent; the cost-of-living crisis demands on affordability checks; and the ongoing rise of payment initiation services and sweeping.”

“We believe that these forces will extend into 2023, so we expect to find well over 15 million consumers benefiting from account information and payment initiation services around this time next year,” adds Van Vonno.

The government also supports Open Banking. In his first Mansion House speech as Chancellor in July 2021, Rishi Sunak, now the UK Prime Minister, called for financial services to be “more open, more competitive, more technologically advanced, and more sustainable”.

As regulations, technology, and consumer awareness of their data improve, Open Banking will go from strength to strength. The payments sector should be embracing this change.

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