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Open Banking Surpasses 5 million User Milestone in the UK

Sifted | Apr 5, 2022

Open Banking UK growth - Open Banking Surpasses 5 million User Milestone in the UK

Source: Openbanking.org.uk

Just this year, open banking hit 5m users in the UK. While this is far behind experts’ predictions of where the tech would be, it’s still a significant milestone.

“Open banking is the ability for people to have more control over their bank accounts.  Closed banking means, if you have a bank account, you are at the mercy of your bank, you can only do the things that the bank has allowed you to do.

“But with open banking, your bank account is suddenly more valuable. You can use your bank account with third party applications, to track your finances, help you save and spend smarter. Moreover, with your consent, your bank account can make smart payments and smart payment decisions on your behalf.”

See:  Why Apple Acquired An ‘Open Banking’ Fintech

1. Open banking users are picking up steam 

“It doesn’t seem like a lot, right?” says Mesters about the 5m mark. But, he tells Sifted, the speed at which the UK reached it is noteworthy; while it took 10 months to grow the number of users from 1m to 2m in 2020, it took four months to grow from 4m to more than 5m.

2. Adoption varies across Europe 

Due to widespread mandating, the UK scored a 10 out of 10 and was the leading adopter of open banking in Europe. Hungary and Romania, at the other end of the spectrum, were given a two, due to open banking being a low priority for regulators.  Adoption varies not only because of regulatory differences, but also the culture around payments.

3. Payments are accelerating open banking adoption

Boosting adoption — particularly in the UK — are payments enabled by open banking. McKinsey found most use cases created by fintechs and non-banks in the UK centred around payments.

See:  PwC’s Abraham Tachjian to be Canada’s open banking lead

4. Infrastructure providers are the missing link

McKinsey found 30% of open banking licence holders in the UK are infrastructure providers — and this had a “multiplying effect” on market innovation, since these providers make it easier for other fintechs to launch products and services.

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