Do we need to be more open?

I’ve been involved in and studied the open banking landscape in the UK (and beyond) since its inception; with a particular interest in the new services powered by these APIs in mobile banking. As part of our consulting work and benchmark reports (www.optima-consultancy.com/bankapp) we’ve had a particular focus on the rollout and adoption in the industry.

Each month we see the latest stats from Open Banking (https://www.openbanking.org.uk/api-performance/) and each time it nags at me that we're not really being open about the landscape.

It was particularly notable to see open banking celebrate the “10 million user” milestone in July 2024 as when we’re out talking to customers and clients it really doesn’t feel like such a widespread adoption exists – many people in the industry itself don’t seem to use it so are the general public really that engaged? 10 million users out of a working population of ~40m (18-64) would equate to 25% penetration! Or 20% of the population 14+. We’re clearly nowhere near this level of widespread usage so what’s the problem with the data?

What’s a user?

Perhaps a little more transparency is needed from OB in what they shout about in press releases given it misleads? When we dive into the notes on the published data we can see that they “are unable to identify individuals consuming services through more than one brand.? Reporting therefore represents the number of user connections with the brands providing reporting, rather than individual users”. So 10m users of open banking is actually 10m connections across the brands reporting. A KPMG report suggested 62% of consumers multi-bank so it’s conceivable that a user adopting open banking could be connected 2, 3, or 4+ accounts – especially across debit and credit. This could take the number of users down from 10m to 3 million in one swoop! Suddenly an 8% penetration seems much closer to the truth.

Payments or Data? Consumer or business?

However, the situation is further complicated by the fact that user connection numbers include both AIS and PIS as well as consumer and business. So, the 10m July 2024 user milestone is actually 5.17m AIS and 6.1m PIS connections. It is hard to determine what the overlap is, but it’s perfectly conceivable that users adopting OB payments are also likely to consume OB AIS and vice-versa. The same is also true for someone adopting for their SME may also use personally. So, our multi-banking users of ~3m could perhaps be half or less when we account for data vs. payments and consumer vs. business double counting.

Why does this matter?

Following this logic of perhaps ~1.5m unique users, would land at market penetration of 3 to 4% which feels much more realistic. For open banking to succeed however, we shouldn’t be second guessing but tracking accurately and consistently. There are many ways we could approach this but perhaps Open Banking working with UK Finance and other bodies to consistently track usage would be a good start (as done via payment diaries in the UK Payments report). One quick and accurate option would be to seek user penetration statistics directly from the banks which could then be weighted up to produce the market average to be reported by OB.

Whatever route we choose to tackle this, one thing is clear -? we need more 'open' in the open banking!