Open Banking sector at vital crossroads

31st March 2023

New research by lobbying group Coalition for a Digital Economy (Coadec) that the sector is at a ‘vital crossroads.’

The open banking sector has created 4800 jobs and is valued at £4.1 billion. The policy group has based its analysis on data from 82 fintechs active in the open banking sector. The value of the ecosystem was determined by the post-money valuations of firms that raised venture capital funding between 2009 and 2022.

Last year, the open banking sector in the UK raised over £886 million and the median value of a UK open banking firm in the period was £16 million. The report says that open banking has clearly been a success in the UK so far, with over seven million users and 50% of SMEs having used open banking services.

Coadec believes the industry is at a critical juncture, and is calling for urgent clarity on the future regulatory direction of open banking in the UK. Coadec believes that the Open Banking Implementation Entity (OBIE) must continue past April 2023 in order to safeguard the integrity of the sector. However, the policy group is clear that an evolutionary step to ‘Open Finance’ requires political action, starting with a Treasury consultation on an Open Finance scheme, in anticipation of Smart Data becoming law over the coming months.

Luke Kosky, Fintech Policy Lead at Coadec said “The growth of Open Banking has been a UK-led marvel. However, we now face a critical sink or swim moment for the industry.” “We have seen this industry grow to over £4bn within 5 years and with proactive support and regulation the possibilities for Open Banking are endless.”