#Open Banking

The state of open banking in the UK

Jan 07, 2021 - 7 min read
Mark Fawcett, Solutions consultant at Sopra Banking Software

Today, over 2 million UK banking customers connect their accounts to trusted third parties. This figure is up from 1 million in January of last year, according to the Open Banking Implementation Entity (OBIE). The upswing in usage has been driven by two main factors: first, consumer financial concerns amid the coronavirus pandemic; and second, the fact that UK banks have warmed to the idea of open banking.

The shift in attitude has been noticeable, with 73 percent of UK financial institutions (FIs), indicating they have a positive attitude toward open banking in 2020. By comparison, only 48 percent held this opinion in 2019.

Initially, many financial executives in the UK approached open banking from a compliance perspective. But as the years have passed, it has become ever more central to the evolution of the industry.

This is because the use of open APIs is proving to be a significant driver of innovation. And as institutions in the UK overcome regulatory obligations, they, in turn, start to view open banking less as a threat and more as a strategic opportunity.

Open banking use cases in the UK

As the open banking movement begins to mature, banks, fintechs, and mutual and member owned financial organizations are finding creative ways to wield data integrations to benefit end-users. The benefits of these use cases for customers are numerous, ranging from personalized financial advice, finance-management tools and easy-to-access account information. For banks, advantages of open banking use cases include reduced overheads, higher revenues and improved customer engagement.

Below are three examples of open banking use cases taking place in the UK:

Personal finance management

Chatbot company Plum has seized the opportunity to integrate with existing banks and build better customer experiences. Its personal finance assistant app uses AI technology to aid consumers with money management. Currently, Plum supports “most major banks,” has 130,000 registered users in the UK, and has already expanded to Ireland.


Another recent entrant is Money Hub, an app that brings all customer banking information (accounts, investments, assets and borrowing) into one place. Moneyhub’s platform is sector and industry neutral and can be white-labeled or accessed via API. The company has not released user figures but has stated that its service is already tracking £2.5 billion worth of assets.

Digital lending

Although not a lender in the traditional sense, Wagestream is a startup offering a form of pay advancement through the utilization of open data. Wagestream increases employee liquidity by giving them access to money they’ve earned but haven’t been paid for yet. The mobile platform currently has 115,000 active users, and the company has raised over £65 million in funding.

Europe’s open banking leader

London has historically been a global financial hub with a deep pool of technical, intellectual and commercial expertise. Also, a recent flood of investment into London’s fintech scene has trickled down, creating fertile ground for building an app or launching a startup.

These are the ideal conditions for open banking to take off. And, better still, the sentiment of the traditional banking sector is beginning to come around. While 52 percent of UK FIs saw open banking as an opportunity in 2019, 66.7 percent do so now, which is almost 10 percent higher than the European average. On the measure of “openness” (the ratio of a bank’s assets that have been opened by APIs to the sector’s overall assets), Deloitte reports that only the Czech Republic, Lithuania, Estonia and Sweden have similarly progressive environments.

However, all these countries lack a commercial center like London, leaving the UK as open banking’s undisputed leader. Daniel Kjellén, the co-founder and CEO of Swedish-headquartered financial firm Tink, recently told Business Cloud that he believed that “the UK is charging ahead of the rest of Europe in its open banking journey.” Indeed, 2020 saw the number of regulated open banking providers in the UK surge above 300, and numerous products start to gain traction.

While the progress is undeniable, the UK is not “there” yet. As Imran Gulamhuseinwala, Implementation Trustee for Open Banking Ltd, put it, “the APIs are in the market, but there’s still a lot of work to do to get the performance of those APIs in a position where business-critical services can be built off them, there’s a lot of work to ensure payment functionality gets built out.”

Brexit and the future of open banking

While many industry professionals acknowledge the UK as an open banking leader, one lingering area of uncertainty is Brexit. The UK exited the European Union on 31 January, 2020, and what that means for open banking remains to be seen.

Brexit raises many potential issues; for instance, UK providers – whether they be banks, electronic money institutions or fintech startups – have lost their “passporting” rights. Talent is another critical issue, with many firms lobbying the government to maintain the flow of fintech talent into the country.

Since January of last year, the UK banking sector continues to garner high levels of investment and provide a blueprint for innovation worldwide. However, it’s unclear the degree to which the UK banking sector will be able to operate within the EU single market going forward.

Looking forward

Open APIs are transforming the way banking customers in the UK manage their finances. With new use cases being explored, nonfinancial brands accelerating the adoption rate and financial firms building more open banking-fueled applications, things are moving quickly. Indeed, progress in open banking is giving rise to broader discussions of open finance.

In these circumstances, banks that wish to maintain their customer relationships and avoid the possibility of becoming data providers must focus on the upside of open banking. That is, banks can collect more data about their customers and use it to enhance product customization and better meet their needs.

For most banks, simply building an account aggregation app will not cut it against the types of services in the pipeline. The specific approach, of course, depends on many factors. A large institution with a big clientbase and a broad product portfolio can position itself as an ecosystem and add new products and services via external partners.

Regardless of any Brexit-induced uncertainty, or the significant amount of work left to be done, the UK banking industry is on the verge of a monumental shift toward increasingly data-driven solutions. Now is a pivotal moment for banks to keep loyal customers. But to do so, they, perhaps more than ever, need to find new ways to compete and innovate.

Click on the links to find out more about personal finance management, multi-banking and digital lending open banking use cases.