Henk Van De Hulle
CEO, Open Banking Implementation Entity (OBIE)
The UK has long been a leader in financial services innovation, so it is no surprise that we have led the world with our pioneering approach to implementing open banking
The goal of open banking is to drive innovation and competition in UK financial services for the benefit of consumers and small businesses. Open banking allows consumers and small businesses to leverage their financial data to move, manage and make the most of their money. There has been strong growth as we have moved closer to the end of implementation Roadmap; in 2021, we witnessed a 60% increase in the number of active open banking users, with adoption increasing at a rate of 1 million new users every six months. This year we are seeing that momentum continue.
Supportive environment for fintechs
So, what is driving this growth? While a lot of our initial focus was to get the building blocks in place, we also created an environment for fintechs to grow, innovate and ultimately, provide real-world solutions for consumers and an estimated half of the UK SME’s.
Open banking technology empowers people to use their data to unlock the apps and services that are specific to their financial circumstances. What people care about are tools that can help them make better decisions about the things that really matter to them: How much should I save? How much can I spend? Should I borrow?
Helping people manage their finances
Our own research findings (featured in the Open Banking Impact report) found that of those customers using personal finance management apps, 75% said it was helping them to keep on top of expenditure. Meanwhile, 64% credited the apps as helping them keep to a budget. Similarly, 64% claimed that open banking savings apps had increased their total level of savings, providing a financial buffer.
Open banking technology empowers people to use their data to unlock the apps and services that are specific to their financial circumstances.
We are also in the middle of rolling out variable recuring payments (VRPs) and expect related products to be more widely available this year. We think it will really transform the way people save and in turn build financial resilience. VRPs are like a clever direct debit as they boost savings by offering customers more convenient ways to save and make their money work harder, for example to earn higher interest or to avoid overdraft charges. This is more important than ever as we see significant increases in the cost of living.
Open banking potential in other areas of our everyday lives
We have built the open banking rails and the network, all of which can be leveraged to support other initiatives and sectors, such as open finance (insurance, pensions, etc) and smart data (telecoms, energy, utilities). The Government and regulators are keen to ensure open banking doesn’t become a missed opportunity. As with any public good, the positive impact of open banking for consumers, businesses and the wider economy will multiply as adoption grows.