What problem is open banking solving?

We often hear people ask, ‘What problems can open banking solve?’

There are many use cases that are being solved today through open banking. Like anything, it will take a few more years to fully understand the full range of challenges it can solve as the ecosystem matures. HBR asserts, “It took 30 years for electricity and 25 years for telephones to reach 10% adoption but less than five years for tablet devices to achieve the 10% rate. For open banking, the next two to three years will be crucial, especially with the introduction of open finance.”

Natwest states, “Many myths still exist around open banking, not least the notion that it is simply a regulatory initiative that applies only to consumers and small businesses.” Although it originated from the UK’s retail banking market report in 2016, the technology’s ‘broader scope’ is still being explored as more and more financial services providers make their public APIs available.


Consumers and businesses alike have already started experiencing open banking’s benefits (sometimes without realising they’re using it). They can obtain products and services that at one time were out of reach. Additionally, they can save money, borrow more, lend better, and receive funds faster. All are driven through the consent to share their financial data to receive a better value exchange.

But open banking isn’t just about an outcome. It also reduces if not removes the need for time-consuming paperwork and lengthy onboarding. It helps businesses know their customers better, through data insights. This, in turn, enables a different perspective on the individual or business they are doing business with. Ultimately, open banking provides businesses and individuals with a faster and smarter way to manage their money. This delivers a better, more personalised experience. As a result, it boosts existing revenue streams, creates greater engagement and streamlines processes.

Open finance

The introduction of open finance, the next step in the journey to have a more open data economy, presents new opportunities not just for consumers, banks and financial service providers, it will also benefit (to name a few):

  • Financial advisers
  • General insurers and intermediaries
  • Investment managers
  • Life insurers and pension providers

Open finance will take open banking to the next level. It will open the door to even more data points to drive further innovation and inform future strategies.


When it comes to SMEs, open banking is helping them improve their payments. It eliminates manual bank transfers and reduces card processes and transaction fees. Cash flow management is another crucial aspect of business growth and open banking’s benefits. At the end of last year, collectively, over 26.6m open banking payments were made. This represented an increase of over 500% in 12 months.

The adoption of open banking payments by the HMRC signals that paying by open banking will become more popular in the years ahead. In September 2021, HMRC achieved an astonishing £1 billion milestone worth of payments made using open banking. Furthermore, HMRC’s incorporation of a ‘Pay by bank’ option into its annual self-assessment process took the total number of payments made via open banking to 3.86m in January 2022. This represented an increase of 19.3% in December 2021.


Open banking improves money management not just in business finance but in personal finance too. From financial assessments and giving people more control over their data to access to better products and services instantly and seamlessly.

Not only will open banking payments become more widely available, but experts are also predicting that cross-border open banking payments will be possible in the future. With open banking adoption steadily increasing, it’s clear that businesses will need to compete in real-time. The ability to make decisions in seconds, not minutes or days, and offer truly personalised products and services will be the new standard.


Financial inclusion

More broadly on a social level, open banking is promoting fairness and transparency. It can help address problems of access and financial inclusion, especially with concerns about the rising costs of living. This challenging context means not only are consumers feeling the pinch, but they are also more conscious of their credit scores. According to TransUnion, the number of people checking their credit score has risen by one third. It also found that “With food and energy bills the areas of greatest concern, 60% say rising costs make it harder to improve their financial positions in the coming year.



Technological innovation drives the ecosystem. Open banking aims to bring new and improved products and services by accessing customers’ data (with their consent) to deliver a more personalised experience. Furthermore, it is encouraging collaboration between banks and non-banks, driving innovation across the UK. Previously, the incumbent held customers’ financial data. This made it difficult for customers to access a wider (and better) range of products and services.



According to Penser, open banking is expected to reach a market size of $395 billion by 2026 with close to 39 million customers globally.

While the number of public banking APIs is relatively small, McKinsey research found that 75 per cent of the top 100 banks globally have made public APIs available. In other words, API connectivity is improving as more and more banks make their public APIs available.


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