One-third of Businesses and Three in 10 Consumers are Ready to Adopt Open Banking Payments

Open Banking
27.02.2023 10:25 am

Businesses and consumers alike are ready to embrace open banking, according to a survey from YouGov and GoCardless. 29% of UK consumers said they are likely to try open banking-powered Variable Recurring Payments (VRPs) as they become more widely available, with 36% of that group agreeing that the technology sounded convenient. At the same time, one in three (33%) UK financial decision-makers stated they are likely to use VRPs in the future, with 23% of those citing convenience as their top reason for trying.

Simplicity and security are also important factors driving payer preferences. Nearly four in 10 (39%) consumers said security is the most important factor in prompting them to try a new payment method. Almost one in six (16%) cited ‘simple to use’ as the top motivator.

The new insights bode well for the adoption of open banking, which reduces unnecessary friction at the checkout while increasing speed and security. Adoption is growing; the Open Banking Implementation Entity (OBIE) revealed last week that there are now 7 million active users. However, industry players believe there is more to be done as the market awaits recommendations from the Joint Regulatory Operating Committee (JROC) on the future of open banking in the UK.

Hiroki Takeuchi, CEO and co-founder at GoCardless, said: “Open banking has changed the face of financial services in the UK; from better, safer banking experiences for consumers to more affordable services for businesses that truly rival traditional costly payment methods like cards. However, we need to build on this momentum to maintain our position as a world leader in this space. There’s a lot to do but cracking on with establishing OBIE’s successor, ensuring the current standards apply across all market participants, fixing reliability and consistency issues, and building out Variable Recurring Payments would be a great place to start.”

Case study: Home-buying made easier through open banking

Nude, the savings app for first-time buyers, takes a truly modern approach to get people into their own homes as quickly as possible. Savers open a Nude savings or stocks & shares Lifetime ISA, boost their deposit with 25% government bonuses, and receive customised savings ideas through open banking data to build their deposit and buy their home in record time.

Nude uses GoCardless to move money from a saver’s bank account into their Nude Lifetime ISA, taking advantage of both the fintech’s Direct Debit capability and Instant Bank Pay, its open banking-powered payment functionality. Customers loved the ability to see their deposit grow instantly: in the first three months after implementing Instant Bank Pay, Nude saw payment contributions increase by 25%.

Nude has even bigger plans for its use of open banking in the future.

Yoann Pavy, CMO at Nude, said: “Our goal has always been to make saving for first-time buyers quicker, easier, and more manageable than ever before. Open banking has been a crucial part of bringing this vision to life. We use open banking data to provide customers with digestible insights into how they really spend their money and use that information to suggest a range of personalised challenges to help them save more.
“We have also been able to help first-time buyers add to their savings pots using instant, one-off payments powered by open banking. This capability has been hugely popular with our customers and last year, we released another feature, Gift Time, that uses open banking so friends and family can make a contribution directly to the recipient's savings pot.”
“I am extremely excited about VRPs -- the next frontier of open banking, where automation meets flexibility. VRPs will enable us to further personalise the experience for our users, taking recurring payments from customers within agreed parameters. That means we’d be able to automate recommendations when their transaction data indicate they could save more or less, ensuring we stay ultra-responsive to their situation.”