The number of people using Open Banking in the UK exploded this year, rising by 100% to two million customers. But many of those people may not realise they are using it.

Open Banking is the foundation on which apps function when they access personal financial information in order to offer a service. That includes bank apps that allow accounts held with numerous providers to be viewed in one place or those that alert consumers to better deals based on their current spending.

Many consumers (individuals and business owners), who might baulk at the prospect of consenting to a third party having access to their personal financial data, are happy to sign up when they recognise time or money saving benefits.

Open Banking services do only have access to specific data explicitly required to enable the function of the service offered – and consent can be withdrawn at any time.

Johnnie Ball is co-founder and chief data officer with cashflow management firm Fluidly which won the 2018 Nesta Open Up challenge for businesses making use of Open Banking. He explained: “One of the great things about it is its simplicity.

“You download an app, enter your user login and after that won’t know anything about it other than that you’re getting a great service.

“Open Banking technology is very secure, so long as the company you are dealing with is obeying the law.

“People get worried about all their bank transaction data being misused but ultimately someone already has that data (the bank) and they are already using it for things, such as personal credit scores.

“Bank data is already being used, but in a monopoly. This is liberating your data, taking ownership and choosing who you allow to interact with that data.”

When Open Banking launched in the UK two years ago, it was with the intention of creating more competition in the financial services marketplace to allow customers to get a better deal.

Open Banking is essentially legislation that requires data holders, such as high street banks, to share the personal data they hold on a customer, when that customer specifically wants this to happen to allow them to access a service.

The Financial Inclusion Centre, a not-for-profit think tank, has expressed concern that regulators are not yet equipped to keep up with the expanding market.

It has said: “In an era of more complex, fragmented, fast moving financial markets, financial regulators face a much more difficult challenge protecting consumers and making those markets work for consumers and the real economy. We need to upgrade our analogue financial regulation for the digital finance world.”

Regardless, the Open Banking propositions continue to grow.

Services recognised by the innovation body Nesta Challenges this year include those that:

  • aim to make it cheaper, faster and easier to rent a home, in part, by helping people to improve their credit score (Canopy)
  • provide short term low interest loans in exchange for an annual membership fee (Creditspring)
  • specifically match individuals to certain mortgage providers (Mojo Mortgages)
  • help people manage their money via spending analysis and goals (Cleo)
  • aim to save people money on charges for spending abroad (Currensea)

Open Banking providers have also offered numerous new services to respond to new and deepening challenges created by COVID.

Funding Options, for example, moved to offer alternative routes for small and medium enterprises looking for emergency funding via the Coronavirus Business Interruption Loan Scheme.

The Open Banking Implementation Entity (OBIE) announced at the end of the summer that two million people in the UK were now using Open Banking, up from one million in January.

OBIE implementation trustee Imran Gulamhuseinwala said at the time: “It demonstrates for the first time that if you enable citizens to exercise their rights over their own data in a simple and a secure way then they will do precisely that.

“What Open Banking does is it enables a host of propositions and products that real people can use to help them save money on financial services fees. Things like foreign exchange,  things like overdraft charges and other bank changes. And there are Open Banking enabled products out there that make it easier for real people to access other kinds of financial services products, for example, loans and mortgages.”

The OBIE’s head of ecosystem engagement Simon Lyons added: “The future is very, very, very bright.

“We have so much more to come on this journey and there are so many industries that are embracing the benefits that Open Banking can bring to them to give them business benefits and to give, more importantly, our consumers a totally different experience in their banking.”

A full list of registered Open Banking enabled products can be found via the Financial Conduct Authority register and Open Banking register.

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