UK Small Businesses Adopt Open Banking, Outpacing Consumers
10% of U.K. residents used open banking in January. The fifth anniversary of open banking regulation coincided with 7 million active users.
Open Banking Limited (OBL) said that U.K. businesses are adopting open banking, especially cloud accounting software that imports transaction data.
The March 2023 Open Banking Impact Report found that 750,000 small to medium-sized enterprises (SMBs) use open banking products, compared to 11% for consumers.
“Data-driven account information services (AIS) which allow firms to see multiple accounts in one place, providing valuable real-time insights for cash flow and forecasting” dominate SMB open banking use, according to the report.
“Consumers are using more payment initiation services (PIS), which allow them to move money, for example, to top up wallets, or to pay tax or credit card bills,” the report said, adding that when they use AIS, it’s more focused money management tools that can help them budget.
The survey also found that U.K. open banking payments rose from 25.2 million in 2021 to 68.2 million in 2022. As of March 2023, 159 fully regulated enterprises offer open banking-enabled solutions to consumers and businesses.
“It is encouraging to see a continued and steady increase in the adoption of open banking products and services, particularly by the U.K.’s small firms which are seeing tangible benefits from real-time business insights offered by open banking data,” Marion King, Chair and Trustee at OBL, said about the report findings.
King added: “It is also exciting to see the expansion of services in key areas such as borrowing and financial decision-making, empowering people to make better-informed choices about managing their money, which is crucial as we face an increased cost of living [crisis].”
Chris Jameson, managing director, head of GTS product management EMEA at Bank of America (BofA), and Shaunt Sarkissian, Chief Markets Officer at The Bank of London (TBOL), said that investment and creative thinking are needed to accelerate open banking adoption in the U.K. and E.U.
Jameson says that a combination of public and private” will solve the open banking impasse, with private companies establishing client-tailored capabilities and public entities developing robust open banking legislation.
Sarkisson believes that financial institutions and associations like The Clearing House (TCH) and Early Warning Services (EWS), which operates the Zelle P2P network, can help boost adoption.
Why did Zelle take off in America? Sarkissian explained, It was run by [EWS] and adopted very quickly by all the banks [which] had that power of incumbency to roll it out very quickly.
