Open Banking Emerges as a Data Powerhouse with 13.3 Million Users in UK
Open banking in the UK is rapidly evolving beyond its initial promise as a payment innovation. It has become a vital source of financial data that is reshaping risk assessment, credit scoring, and fraud detection.
User Growth and Payment Volumes
In March 2025, open banking recorded 13.3 million active users in the UK, representing 18% of individuals and small businesses with online bank access. The system processed 31 million open banking payments that month. These payments accounted for nearly 8% of all Faster Payments. This is according to industry figures. This reflects a 40% increase in users. There is also a 70% rise in payment volumes year over year. This highlights the growing adoption of open banking services by both consumers and businesses.
Impact on Financial Services
The surge in open banking adoption is about more than just faster payments. Financial firms are using the transactional data from open banking APIs to build more dynamic customer profiles. Regtech companies use this data to create real-time profiles. Unlike traditional credit checks that rely on static documents, open banking data provides insights into income. It also reveals spending habits and cash flow stability.
For lenders, this translates into faster and more accurate underwriting. A UK fintech specializes in microloans. They reduced loan decision times from 24 hours to under five minutes. This improvement happened after integrating open banking data. They also saw default rates fall by 12%. Approval rates increased by 20%. This demonstrates how granular financial data improves credit risk models.
Fraud Detection Improvements
Continuous monitoring of account activity through open banking has enhanced fraud detection capabilities. Firms can now flag unusual transfers or atypical merchant categories more effectively. Early adopters reported a 50% reduction in chargebacks and unauthorized transactions, helping reduce losses and boost customer trust.
Regulatory and Security Considerations
Despite its advantages, open banking data raises compliance challenges. Firms must navigate strict regulations including GDPR and the UK’s Data Use and Access Bill. Obtaining explicit customer consent and protecting sensitive information from misuse are critical. Strong customer authentication and encrypted APIs are essential to maintaining data security and regulatory compliance.
Future Trends
Looking forward, variable recurring payments allow customers to automate bill payments. They are expected to double their share of open banking transactions by 2026. Embedded finance is also on the rise. Open banking data enables seamless financial services integration across e-commerce platforms. It also integrates with payroll systems and more.
Global Adoption
While the UK leads in open banking adoption, other countries are quickly embracing it. Brazil, India, and Australia are rapidly implementing their own open banking frameworks. Juniper Research forecasts that more than 645 million users worldwide will use open banking services by 2029.
Conclusion
With 13.3 million users and 31 million payments in a single month, open banking has moved beyond a simple payments channel. It has become a critical alternative data goldmine that is transforming how financial institutions manage risk, serve customers, and innovate.
