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May 31, 2024

Is open banking living up to expectations?

More people are using open banking in the UK, but adoption is slower than expected. Sifted interviews GoCardless to examine where the sector is really at in the country 

Awareness and adoption of open banking — a technology which allows you to share your financial data with companies of your choice — has grown in the UK. The first six months of 2023 saw double the volume of payments seen in the same period the previous year. By January 2024, one in seven digitally active consumers in the UK had used open banking. 

However, while the scope of open banking is on the up, the UK’s progress in the sector has moved slower compared with other global open banking adopters – Brazil, for example, reached 5m connected accounts five times faster than the UK.

“2023 was very much a year where everyone had got over the initial excitement of thinking [open banking] is going to solve everything – but that's just human nature,” Siamac Rezaiezadeh, VP product marketing and insights at GoCardless, tells Sifted. 


“In reality, what was happening was that people, businesses and consumers started to understand open banking and how it can address specific pain points.”

So where is open banking in the UK really at?

The adoption curve

Open banking has scored some significant successes over the past year – notably, Rezaiezadeh believes, a wider range of customers adopting the technology.

“​​For businesses, open banking is moving beyond the early adopters and towards addressing a specific problem, with the help of companies like GoCardless arranging the various pieces of open banking to solve it,” he says. “This means taking actions that actually increase revenue, or reduce fraud, or get customers using your products faster - and much more.”

There’s lots to look to in terms of notable successes, but lots of scope for growth too.

But while the number of payments made via open banking has gone up, Rezaiezadeh says it’s important to “be very real” – and on the payment side, while the UK is seeing in the early tens of millions of payments per month, it's a “drop in the ocean” compared to the total number of payments that are made globally.

“There's been growth, but there's a lot of space to go,” he says. “The UK did a lot of work on setting up open banking in a way that's replicable and I think we've started to see some of those learnings be applied in other spaces as well. 

“The UK sped out ahead, but other countries like Brazil and India have gone out faster in some areas of open banking,” adds Rezaiezadeh, noting that the market conditions in the countries were however different - the pains of paying online were higher, for example. “There’s lots to look to in terms of notable successes, but lots of scope for growth too.”

Rezaiezadeh notes a significant success in the sector is the increased awareness of its core ability to enable consumers to securely share their financial data with third-party organisations. For example, in the UK, successful API calls have steadily been increasing, peaking in March 2024 with an average of 49.2m a day.  

GoCardless’ Bank Account Data product, for example, automates account reconciliation, forecasting and reporting by connecting all bank accounts directly to an application - connecting thousands of bank accounts to an app with a single integration.

According to Rezaiezadeh, this has multiple benefits which enable businesses to build better products, based on more accurate data they have access to faster:

  • If you're a lender, you can build a comprehensive financial view of your borrowers quickly, and offer better products as a result; 
  • If you're an accountant, you can eliminate manual data entry and easily reconcile across different accounts; 
  • If you're a retail business you can build customer loyalty programmes that have a holistic view of your customers' spending patterns; 
  • And if you're any business that has a customer sign up flow, you can automate things like name and ownership of bank account details. 

"What's really powerful for consumers is the ability to then share this information with companies they choose to get faster access to products they want or to help those companies produce more tailored products and experiences,” says Rezaiezadeh. “What's more, the ability to easily trigger payments from within their account — without ever having to enter payment details on a website — is another benefit for the consumer.” 


He adds that small businesses spend large sums of money processing card payments and processing offline payments – as well as investing a lot of time in doing it. The data behind open banking, he says, offers an opportunity to solve that.

Overcoming challenges

But like any growing sector, open banking is facing its own set of challenges. Reluctance from banks to move away from legacy software, public awareness of open banking and endpoint security – which involves the processes, protocols and infrastructure necessary for business networks accessed by devices like laptops – are all prevalent issues.

There's a world where open banking can bring great benefits to in-real-life transactions, but you're not going to see mass adoption until it's really easy for consumers.

While Rezaiezadeh agrees there are a lot more “nodding heads” for open banking now compared to what there once were, but there are still hurdles to overcome to get to the point where using a bank account for onboarding, making payments and sharing data is the norm.

“When we get to that point, you’ll have that high level of awareness and usage on the payer side so we will see really widespread adoption that will then drive through the benefits that you get via open banking,” he says.

For distribution, Rezaiezadeh says it’s important that open banking technology – be it payments or data – is embedded in places where people already operate so that customers don't have to spend a significant amount of time and money integrating the tech.

“GoCardless currently has over 350 partner platforms,” he notes. “We've already embedded our technology so that if you're a business and you're using Xero or Sage, for example, you can get started with GoCardless straight away with minimal work.”

On the payer side, Rezaiezadeh questions how this technology can be embedded in the tools and devices that payers use every day.

“I suspect there's no way that we could see widespread adoption of open banking in real life from a payments perspective until their integration with Google Wallet, Apple Pay and so on,” he says. “I think there's a world where open banking can bring great benefits to in-real-life transactions, but you're not going to see mass adoption until it's really easy for consumers.”

Support essential for growth

Rezaiezadeh believes there are real opportunities for the UK economy to benefit from wider spread adoption of open banking – and this could be achieved quickly with the right support.

The next couple of years will be important for open banking.

“If any part of the government decided to throw themselves behind open banking [more so than they have done already] and helped drive some of those incentives so that we have something that's both market and regulatory driven, there could be some very quick wins for the sector,” he says. “But it's clear that every element of the value chain — including banks themselves — needs to see some commercial benefit. Open banking only works if the experience is great for consumers, and that requires investment.” 

Rezaiezadeh says the launch of commercial Variable Recurring Payments (VRPs) use cases later this year will extend adoption. VRPs enable the collection of recurring payments in instances where the amount regularly needs to vary or fluctuate. Offering the known experience of direct debit but with additional speed and security built-in, commercial VRPs should broaden the tangible uses of open banking.

From this launch, he predicts organisations like energy companies, charities, small businesses and the government will start to see how and why they should use open banking and start to actually implement it.

“The next couple of years will be important for open banking,” Rezaiezadeh concludes. “Companies are going to get real about what it can and can't do for them today, and we'll see more widespread adoption as a result - but in focused areas that actually solve problems.” 

Securely access your user’s bank account information for better lending, accounting, verification and financial management with GoCardless. Get more information here