January open banking insights

2022 was off to a strong start as the OBIE celebrated a milestone of 4.5 million users. Open banking growth remains solid and cumulative.

According to openbanking.org, 3.9 million users are consumers and a further 600,000 are small businesses. Adoption saw increases too. 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. However, the real showstopper was open banking payments. At the end of last year, over 26.6 million open banking payments were made. This represents an impressive increase of 500% in 12 months.

 

January 13th marked the fourth anniversary of the PSD2

The Payments Service Directive or PSD2 made open banking a regulatory requirement in the United Kingdom. Undoubtedly, it transformed the way people share financial data. According to the OBIE, it has also placed the UK as a global innovator in financial services.

The OBIE’s technical standards and delivery of a back-end infrastructure have not only guaranteed the performance of the technology, but the standards have also encouraged collaboration in the ecosystem of financial service providers, delivering multiple use cases of real-world application. One of the most beneficial applications of the technology is financial management apps. The Open Banking Impact Report found that 75% of customers using PMF apps said these tools helped them stay on top of expenditure. Furthermore, 64% of customers said their savings grew, providing a financial buffer. Nearly 25% of these customers saved for the first time.

Charlotte Crosswell, Chair and Trustee of the OBIE said she was ‘delighted that we are beginning to see how open banking is giving people more control over their money.’ This couldn’t have been truer of the pandemic when many users downloaded apps to help them manage their money better.

 

Revolut launches as a bank in more Western European markets

Photo credit: Sophie Dupau

 

Revolut launches as a bank in ten Western European markets

Following the rollout of its Lithuanian banking licence to ten European Countries in January (Belgium, Denmark, Finland, Germany, Iceland, Lichtenstein, Luxembourg, Netherlands, Spain, and Sweden), Revolut is now available in 28 countries. It is inviting customers to upgrade to a full bank account. These customers can now upgrade and add deposit protection of €100,000 to their accounts for free.

The bank anticipates that this rollout will give customers an ‘even greater level of security and confidence.’ It will also enable the bank to launch new products and services. Currently, Revolut only offers an e-money account in Ireland and the UK. This kind of account doesn’t qualify for deposit protection.

According to the Financial Times, Co-founder, and CEO of Revolut, Nik Storonsky said that he hoped to secure a UK banking licence early in 2022. It has operated as an e-money institution in the UK for nearly seven years. As a result, Storonsky said a UK banking licence will help the bank build consumer trust. There’s a direct correlation between licences, trust, and business metrics.

 

Monzo lands funding from the Chinese tech giant, Tencent

Monzo made headlines thanks to a fresh injection of funding from Chinese tech giant Tencent, amongst other investors, including the Abu Dhabi Growth Fund (the sovereign investment arm of the government of the United Arab Emirates). According to AltFi, ‘The new cash from Tencent brings Monzo’s total haul to $600m for the round.’ The latest round values the neobank’s business at $4.5bn (£3.3bn). Monzo cited the high level of investors as a testament to its performance and the opportunity present.

 

Amazon reaches a settlement with Visa

Following December’s news that Amazon would no longer accept Visa credit cards on January 19th, the two reached a last-minute agreement. According to AltFi, Amazon says it is ‘working closely with Visa on a potential solution that will enable customers to continue using their Visa credit cards.’ It also wrote to customers promising that should it make any changes related to Visa credit cards, it would give advance notice.

In January, Business Insider covered Visa’s new platform, the Visa Acceptance Cloud or VAC, which it is trialling. The platform allows payment service providers to embed transaction software into digital devices beyond payment terminals.

 

Operational resilience of cloud computing giants

According to the Financial Times, the Bank of England’s Prudential Regulation Authority (PRA) is looking at the operational resilience of AWS, Google Cloud and Microsoft Azure.

  • AWS is partnered with Barclays and HSBC; Lloyds Banking Group also announced partnerships with Google Cloud and Microsoft Azure.
  • Challenger bank, Revolut uses Google Cloud.
  • It isn’t just challenger banks relying on AWS. Other cloud banking providers like Thought Machine and Mambu also use AWS for their services.

According to McKinsey, between 40 and 90 per cent of banks could move their IT operations to the cloud. Nonetheless, regulation remains a ‘thorny issue’ as the UK’s banks rely on the same three or four suppliers. Whilst the PRA’s framework covers the use of cloud computing, ‘the regulator is also considering the introduction of more robust outage and disaster recover tests’ to ensure the security of customer data.

 

GoTo, Mastercard, and Finaro will plant one million trees by 2025

In a move to promote environmental conservation, these three big brands have joined forces for ESG initiatives.

Mastercard’s Priceless Planet Coalition brings companies, banks, cities, and consumers together. The United Nations’ Intergovernmental Panel on Climate Change (IPCC) asserts that limiting the average temperature increase to the critical target of 1.5°C by 2030 requires an additional billion hectares of trees.

 

Open banking growth in 2022

According to PwC, 64% of adults are expected to be adopters by 2022. It’s clear use cases will only grow as adoption steadily increases in the months ahead.

Finally, follow us on LinkedIn. We’d love to hear your thoughts about open banking growth in the UK.