Open banking adoption

From HMRC to Experian, the use cases are both numerous and widespread as open banking adoption increases across the ecosystem.


At the end of 2021, Open Banking celebrated a milestone of 4.5 million users. There was a 60% increase in new customers from December 2020’s figure of 2.8 million customers. Additionally, 1 million new regular or active users are added every 6 months.

In February 2022, the ecosystem celebrated a further milestone of 5 million users. Open Banking recapped the most important events from the past year in its news post.


Strong uptake of open banking during the pandemic

Since 2018, the number of people and small businesses using open banking has grown steadily. Undoubtedly, COVID-19 accelerated open banking. The technology experienced a strong uptake with small businesses during the pandemic.

Additionally, lockdown pushed 86% of businesses to use open banking-enabled products like cloud accounting, cash flow forecasting or alternative credit providers. These products have reduced paperwork and improved business understanding and resilience.


HMRC’s open banking-enabled service

One of the biggest entities to make use of open banking is the HMRC. This service allows users to pay their taxes with open banking. Whilst it may not be the most obvious use case, this is perhaps one of the broadest applications of open banking-enabled services. Both taxpayers and people who receive financial support payments benefit from easy-to-use, secure payments.

This cost-effective solution is all part of HMRC’s mission to become a ‘trusted, modern tax and customs department.’ The open banking payment service launched in March 2021 and it is thought to be the ‘first open banking payment service by a government globally.’

Furthermore, according to FinExtra ‘Following an announcement from HMRC in December, Ecospend can confirm it has initiated £2.4bn worth of open banking transactions through its “pay by bank” services across its client portfolio. As a result, customers benefit from a smoother and more efficient payment experience, reducing the cost for both busses and organisations versus traditional card payment.’


How many people are using open banking worldwide?

According to Statista Research, there are 24.7 million open banking users worldwide. This figure will reach 132.2 million by 2024. Europe is poised to be the largest market and is expected to reach 63.8 million by 2024. There are currently 12.2 million users using open banking in Europe.

Mastercard also found that 70% of consumers and 72% of small businesses around the world responded that they would use an open banking-enabled service to manage personal or business financial affairs.


Open banking ecosystem

Open banking adoption rests not just on users, giving consent to share their financial data, but also on the participation of the big (and smaller) players in the ecosystem. Many of the larger players in financial services have launched their own open banking platforms like Klarna, which offers a range of online services for both consumers and businesses. Partners are developing and testing new services and products with Klarna to access 4,300+ banks across Europe.

Mastercard recently launched open banking applications with four separate offerings, including verifying the real-time status of TPPs and an advice centre for banks building out strategies.


What banks are using open banking in the UK?

The nine largest banks and building societies in Great Britain and Northern Ireland are using open banking. They are often referred to as the CMA9.

  • AIB Group (UK) plc trading as First Trust Bank in Northern Ireland
  • Bank of Ireland (UK) plc
  • Barclays Bank plc
  • HSBC Group
  • Lloyds Banking Group plc
  • Nationwide Building Society
  • Northern Bank Limited, trading as Danske Bank
  • The Royal Bank of Scotland Group plc
  • Santander UK plc (in Great Britain and Northern Ireland)


Are only the CM9 using open banking?

No, the above list represents the biggest banks using open banking. There are many banks, including challenger banks or neobanks, also using open banking. The OBIE maintains an updated list on its FAQs page.


What industries are using open banking in the UK?

Banks and personal financial management apps use open banking to aggregate customers’ financial data from all types of accounts, such as loans, investments, and mortgages. However, it isn’t just these industries that can benefit from open banking. Other industries like lending (and insurance) can use open banking data to offer more personalised products and services.

  • Using data science, lenders can generate reports on a customer’s credit usage, cash flow and income stability without having to worry about fraud.
  • They can instantly cross-check a customer’s application with their personal data from their bank, such as name, address, and employer ID.
  • Additionally, with open banking, lenders can act pre-emptively, restructuring loan conditions, before the borrower defaults on the loan.

Consumer credit reporting companies like Experian are also using open banking to transform their business processes and services. Previously, these businesses used outdated or incomplete customer data (some banks do not report customers’ credit actively). Automatic aggregation of data addresses these issues, providing better, more comprehensive calculations.

It isn’t just the financial industry that is making use of data aggregation to improve business processes, products, and services. Landlords can now leverage data for assessments to make better, more informed decisions. This has transformed applications for student and self-employed applicants. With open banking, reference check agencies can analyse applicants’ financial behaviour: loans, income, expenditures, and other transactions. Finally, the identity verification process is seamless with open banking; so, businesses can approve tenants instantly.


How is open banking predicted to grow?

Experts are predicting that personal finance tools and budgeting apps will continue to grow in popularity as more and more users connect their accounts and leverage data, especially when it comes to switching providers.

We will increasingly see more lending based on open banking data and relationships between users and providers managed through open banking. It’s predicted payments will have the biggest impact on merchants and small businesses as they save money and access a better service. Whilst this growth may not come in the form of a steep curve upwards, the adoption of big players like HMRC and Experian signals that more and more people will become familiar with open banking and see its benefits.


North America’s fastest open banking growth rate

According to Allied Market Research, ‘North America is projected to portray the highest CAGR of 26.5% during the forecast period, due to rapid adoption of advanced technologies and presence of the majority of key players’ in this region. Nonetheless, Europe will maintain its dominance in terms of revenue due to government directives. With this prediction, it’s clear the open banking ecosystem is quickly ramping up. However, Europe will hold its position in the near future.


If this has raised a few questions or you would like to explore open banking, then please do get in touch. We have the knowledge, product, team, and experience to get open banking data and payments working for you.