Uptake of open banking has doubled over the past six months, with more than two million consumers now making use of the data-sharing service.
According to new research by the Open Banking Implementation Entity (OBIE), approximately 45 per cent of new open banking consumers are aged between 25 and 34 years old.
An OBIE survey – which was sponsored by Nesta Challenges’ Open Up 2020 Challenge – found that one in five adults across the UK began using online banking apps during lockdown, and more than half (54 per cent) now use them regularly.
The data shows that consumers are using open banking-enabled products to better understand their spending, how to save, manage their income and expenditure or access cheaper credit.
“I’m excited to see the two million users threshold passed so quickly,” said David Beardmore, ecosystem development director, OBIE.
“Open banking will revolutionise the way we pay. While open banking payments are currently a small proportion of open banking usage, recent strong growth is a sure sign that people welcome more payments choice. We predict that payments will eventually form a considerable proportion of our growing user numbers.”
Since January 2020, OBIE has estimated that an average of 160,000 users have switched to open banking each month.
“Open Banking used to be the best-kept secret in financial services,” said OBIE trustee Imran Gulamhuseinwala.
“With two million active monthly users and growing strongly that is clearly no longer the case. We can now see that people want to exercise their rights over their data and will do so, as long as you make it simple and secure.
“Open banking enabled products are rebalancing the market in favour of consumers and small businesses. Users are now able to engage more with their finances and getting access to better products.”
Open banking can be used by consumers to find better deals on credit, savings accounts and mortgages. It can also provide better visibility over multiple bank accounts, as well as offering spending analyses and setting savings goals. For business users, it can identify a range of potential funding solutions, including alternative lending.
“Open banking technology has been crucial in maintaining access to credit during the pandemic by giving banks and other credit providers access to borrowers’ real time financial transaction data,” said Freddy Kelly, co-founder and chief executive of challenger credit reference agency Credit Kudos.
“It enables lenders to make more informed decisions, opening a much wider range of borrowing solutions and potential better rates for customers.”