Open banking is a growth engine Britain cannot ignore
Open banking doesn’t grab headlines like AI, but combining these emerging technologies can deliver exponential benefits, writes John Glen MP
Economic growth is the government’s primary ambition, and one of its greatest challenges. Delivering it requires a healthy mix of both quick wins and long-term policy initiatives to achieve sustained growth that keeps the UK truly competitive.
The UK’s financial services sector is often described as our crown jewel, with a respected rule of law and reliable regulation. But to retain the UK’s competitive edge, we need to strike the right balance between regulation and innovation to unlock the level of growth that we know is possible. One area that is primed to accelerate its contribution to much needed economic growth is open banking, with 17.5m monthly users and delivering an estimated £8.3bn in economic value since its inception eight years ago.
Open banking is one of our success stories, something that was truly trailblazing eight years ago. The UK was the first country in the world to implement it at scale; and that early vision and understanding of the opportunity has created a dynamic fintech ecosystem, positioning the UK as a global reference point for data-enabled financial services.
In my time as City minister, I saw its transformative power. Now firmly embedded in our financial infrastructure, our businesses, consumers and government departments are embracing open banking at record levels and its adoption is growing strongly.
Through the sharing of current account data with trusted third parties, open banking is providing choice and control over payments and enabling a wide range of automated and tailored tools to make your money go further. It is becoming part of people’s everyday financial lives, offering many – often unnoticed – enhancements that add up to meaningful impact.
But there is so much more benefit that can be realised, and I believe passionately in the scale of the opportunity we have in front of us. Even by continuing on the same organic trajectory, our new report with analysis by EY, shows that in just five years open banking could be delivering £7.4bn of economic benefit every year. If fully adopted across the UK, the impact would be significantly greater still.
Open banking can power SME growth
The report found the largest impact to date has been in helping SMEs focus on growth by automating back-office functions to support cash flow and reduce the cost and time spent on admin. The largest potential opportunity to be realised is in lending, where using real-time data in affordability assessments can support access to credit for consumers and businesses. Enabling switching and money movement to maximise returns, helping consumers avoid over-payment through deals and subscription-management, and providing a secure, transparent, low-cost payment alternative can all also drive significant tangible value. And these enhancements to financial health flow back into the economy, driving growth.
Open banking has demonstrated its credibility – the concept is proven. To take this to the next level, policymakers, regulators and industry must consider how the framework can evolve, building on the strong foundations already established and making the capabilities of open banking work even harder for consumers and businesses.
Eight years of experience in the banking sector is an invaluable test case to fast-track what we’ve learned and apply the benefits more widely, helping consumers access the best deals and rates for their savings, mortgages or investments. The UK is a brilliant place for entrepreneurs and SMEs, but we must ensure we are embracing technology such as open banking to make business lending easier to access so as not to stifle business growth.
Open banking is not always the technology that grabs headlines – we’re much more likely to hear about how AI, digital identity or new forms of digital money are driving towards the next generation of financial services innovation. But combining open banking and these emerging new areas can deliver exponential benefits; it provides the infrastructure that enables AI-based solutions to support more tailored financial decisions, and a basis for payments with new forms of digital money. When trusted data flows securely, markets become more competitive and innovation is unlocked.
Open banking has already proven its value, and the next chapter opens vast potential. For the UK to achieve long-term growth and competitiveness, we must focus on continued adoption, regulatory clarity and industry-driven collaboration. We have a responsibility to ensure the framework remains fit for purpose, secure, trusted, commercially sustainable and capable of expanding into new areas to deliver the greatest impact.
We need to recognise open banking as the successful regulatory initiative it was, but now move to seeing it as an essential lever to deliver growth and innovation at even greater pace.
John Glen MP is an independent non-executive director at Open Banking Limited