Guest blog by David Beardmore from the Open Banking Implementation Entity. First published in Society Matters magazine

Four years on from the launch of PSD2, making open banking a regulatory requirement in the UK, we now have more than 5m active users[1] – consumers and small businesses – benefiting from the ability to leverage their financial data through better insights into their accounts and the ability to make frictionless, real-time payments.

This is a great achievement from the banks, building societies, fintechs and regulators – plus my colleagues at the Open Banking Implementation Entity (OBIE) – which has given end-users the ability to decide who can have access to data about their current accounts and what services they want enabling.

The number of ecosystem participants also continues to grow. We currently have 92 Account Servicing Payment Service Providers (ASPSPs) providing data and 246 Third Party Providers (TPPs) consuming and using that data to provide products and services to consumers and SMEs.

While much of the implementation roadmap has been delivered, the next major milestone for open banking is the introduction of Variable Recurring Payments (VRPs) for sweeping, allowing individuals to move money between accounts in the same name. This means, for example, someone could set their own threshold in their current account at the end of a month and automatically move any funds over that threshold into their savings account.

And while the regulatory order only includes VRPs for sweeping, we know from some of our ecosystem participants that there is great interest in making VRPs a feature for non-sweeping activities such as paying utility bills.

After seeing steady increases in the number of end-users using Account Information Services (for products like personal financial management apps), we are now witnessing rapid growth in open banking payments. The greatest impact to date has been HMRC’s introduction of ‘pay by bank’[2], which has collected more than £4bn of tax in this way in under 12 months.

It’s also fascinating to see the resurgence of the QR code, but this time enabling open banking payments in other sectors too. I expect that we will see more use of QR codes on invoices and bills, on marketing materials, even on your TV screen.

However, the real measure of success is end-user adoption of open banking-powered products and services. It took just ten months to move from 1m to 2m users, but only four months to grow from 4m to 5m.

And while we have not yet completed all the required implementation, we have laid solid foundations for a transformational shift in how individuals better manage access to their data to help manage their finances better.

Our latest Impact Report[3] demonstrated that customers who are using open banking-powered apps are helping to resolve some of their biggest financial challenges – such as building good savings habits, keeping to budgets, reducing unnecessary expenditure, and minimising bank charges. We know, for example, that several utilities companies are already using open banking solutions to help financially vulnerable customers move on to affordable tariffs.

We are also seeing an extension of open banking capabilities beyond current accounts, moving to other financial services products and into other sectors, such as utilities and telecoms.

And as user numbers continue to increase, and as awareness continues to grow, we expect to see a wider range of organisations using open banking to deliver benefits to more and more consumers and businesses.

Next Steps: Find out more about joining the open banking ecosystem here: https://www.openbanking.org.uk/directory/