Voice of the Industry

The future of Open Banking and the rise of 'Open Everything'

Monday 5 February 2024 12:10 CET | Editor: Vlad Macovei | Voice of the industry

Marion King, Chair of Open Banking Limited, reflects on the transformative journey of Open Banking, as it empowers consumers & businesses, shaping a future of 'Open Everything'.


Marion King, Chair of Open Banking Limited, reflects on the transformative journey of Open Banking, as it empowers consumers & businesses, shaping a future of 'Open Everything'.


Open Banking has embarked on a transformative journey over the past five years. It has offered a revolutionary change that empowers consumers and business to better manage their finances, whilst generating competition and choice. It has also enabled a digital identity that can protect consumers and, together with AI, super charge decision making. Today, as we stand on the cusp of an even greater transformation, Open Banking is no longer limited to banking and finance – it is the foundation for ‘Open Everything’.

Open Banking became a regulatory requirement in 2018 with the introduction of the Payment Services Directive 2 (PSD2). This, together with the CMA’s competition remedy that followed the Retail Banking Market Investigation, laid the foundation for the regulatory framework that underpins this ground-breaking ecosystem. Fast-forward to 2023, and Open Banking has become an integral part of the UK's financial landscape, with over 7 million active users.

Unleashing the power of Open Banking

Open Banking’s journey has been marked by significant achievements. This includes strong growth in both the number of users and the volume of payments. The UK registered 11.4 million payments made via Open Banking during July 2023, a figure that rose to 11.75 million in August 2023 – a testament to its growing acceptance. But the true measure of its success lies not in numbers, but in the real-world benefits it delivers to individuals and small and medium-sized enterprises (SMEs).

Open Banking, as an ecosystem, has changed the way financial services are delivered. The publication of the Joint Regulatory Oversight Committee (JROC) Report on the future of Open Banking in April 2023 set the stage for further advances. We must diligently implement JROC’s recommendations to maintain momentum and continue driving innovation. These include extending the availability of Open Banking to a broader audience, mitigating the risks of financial fraud, ensuring effective consumer protection, and exploring new services, such as non-sweeping variable recurring payments (VRPs) – a new type of ‘smart payment’.

One of Open Banking’s many success stories includes its role in cloud accountancy. Open Banking-enabled cloud accounting software has revolutionised financial management for small businesses – near-real-time insights on cash flow support improved decision-making, while Embedded Finance links can help to manage the long-standing challenge of late payments. Our October 2023 Open Banking Impact Report, also revealed that 84% of firms using these solutions reported increased efficiency.

Open Banking and access to credit

Open Banking has also made a significant impact on the credit market. Using Open Banking data in the lending assessment process simplifies the process, eliminates unnecessary paperwork, and expedites decision-making. Using more up-to-date data than traditional lenders, can also significantly improve chances of loan approval. Some alternative lenders are even offering incentives, such as a 1% discount on loan rates for customers who share their financial data. These innovations have opened the door to cost-effective credit options for people previously excluded from lending.

For example, one Open Banking lending platform retrieves and analyses up to two years' worth of transactions and spending data to offer NHS and public sector workers an automatic review of their benefits and credit entitlement. It has identified a staggering GBP 36.3 million in unclaimed benefits each month, demonstrating how Open Banking can be harnessed to improve individuals’ financial well-being.

The future of Open Everything

Open Banking is also the catalyst for ‘Open Everything’. As we extend its principles beyond traditional financial services, we unlock incredible potential in different sectors. Open Energy, Open Mortgages, Open Communications, are fast becoming a reality.

Open Energy, for instance, promises a future where consumers have greater control over their energy consumption, costs, and environmental impact. By seamlessly sharing energy usage data, consumers can make more informed decisions, reducing waste and promoting sustainability.

Open Mortgages will revolutionise the home-buying process, accelerating the verification of financial information and streamlining mortgage applications, helping to make home ownership more accessible.

Data sharing will also facilitate more transparent and personalised telecoms and internet services, giving consumers greater control over their mobile and broadband plans and costs, and facilitating faster switching between providers.

The path ahead

As we reflect on Open Banking’s journey and its broader implications, it's evident that it is much more than just a technological innovation; it's a force for good that is reshaping and improving the economic landscape. As it evolves into ‘Open Everything’, it promises to deliver economic benefits for consumers, SMEs, and the economy as a whole.  The potential is immense, and we are committed to realising it.

Open Banking has the power to democratise financial services, improve consumer choice, and boost economic growth. As stewards of this transformative force, we have a duty to ensure its continued success. This means embracing the future, adapting to change, and staying at the forefront of innovation. The future of Open Banking is bright, and it belongs to all of us.

As we navigate this evolving landscape, we must remain vigilant, adaptable, and committed to fostering innovation for the benefit of all consumers and businesses. Open Banking is not just a chapter in the history of finance; it is the dawn of a new era that promises a fairer and more inclusive future.

This editorial piece was first published in the Open Finance Report 2023. We encourage you to download the report and find out the latest trends and developments in the world of Open Banking and Open Finance, as the road to Open Data continues.

About Marion King

Marion is Chair and Trustee of Open Banking Limited, where her key priorities are maintaining the existing implementation of Open Banking, as well as working with the Joint Regulatory Oversight Committee (JROC) to decide the future direction of Open Banking in the UK.



About OBL

Open Banking Ltd (OBL) was set up by the CMA9 in September 2016 as required under the Competition & Markets Authority’s (CMA) Retail Banking Market Investigation Order 2017 to fulfil one of the remedies mandated by the CMA following a market investigation into UK retail banking.

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Keywords: Open Banking, Open Finance, report, financial services, data sharing
Categories: Banking & Fintech
Companies: Open Banking Limited
Countries: Europe, United Kingdom
This article is part of category

Banking & Fintech

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