BANKING
Open banking has come a long way in just five years , establishing itself as a key driver of innovation within finance . But do consumers know what it means ?
WRITTEN BY : ALEX CLERE
Open banking refers to the concept of consumers granting third-party app developers access to their transactional information , usually from their bank , directly through an API . This then allows the fintech ecosystem to build out more value , creating tools that support those customers through their daily lives and bring meaningful insights to their banking data .
Open banking has been around as a concept for several decades , but it has only come to life in practice in the last couple of years . In fact , it may have reached mainstream status at just the right time . According to Constanza Castro Feijoo , Stakeholder Engagement Manager at the Open Banking Implementation Entity ( OBIE ), open banking in the UK – one of the pioneering markets for it – has only been around since 2018 and it took two years to get the standard live .
Like most things in fintech , it began relatively slowly . After 1mn people had started using open banking in their daily lives , it took a year until the industry reached the 2mn people mark . Yet it took only 3 months for open banking to accumulate its latest million customers , going from 5mn to 6mn users . Today , there are 6.6mn users of open banking technologies in the UK , with 90 % of banks adopting the standard and offering this service to their customers . Over 250 fintechs have joined the open banking ecosystem and there are regularly 1bn API calls a month involved in facilitating the technology , Castro Feijoo says .
Part of the reason for this success is that regulators and government agencies have got on board with open banking early , recognising its potential to completely reshape the banking landscape . In the UK , open banking was initially mandated to the nine banks who , together , offer 85 % of all business and personal current accounts – but of course , since those days , the sector has surpassed all regulatory minima . According to Grand View Research , the size of the global open banking market is expected to grow to over USD $ 135bn by 2030 .
Open banking is still learning , still tweaking “ We ’ re still learning and we ’ re finding things we need to improve as we go ,” says Nicole Green , VP Product Strategy and Operations at Yapily , summing up the current juncture that open banking finds itself at . “ That ’ s where we are as an industry – we ’ re a teenager maybe , if we wanted to age ourselves . We ’ re going through that awkward stage .”
“ OPEN BANKING IS STILL LEARNING AND WE ’ RE FINDING THINGS WE NEED TO IMPROVE AS WE GO ”