UK open banking sector valued at £4.1bn by Coadec

With £886m raised by open banking startups in the last year alone.

Over 4,800 UK jobs have been created by the introduction of open banking in the UK, an industry now worth more than £4.1bn to the economy, yet the sector now sits at a “vital crossroads” in its development.

That’s the findings of a new analysis of the UK’s open banking ecosystem by policy group Coadec, which collected data from 82 private fintechs with either Account Information Service Provision (AISP) or Payment Initiation Service Provision (PISP) licences.

These firms raised a combined £886m in fresh funding during 2022 alone.

“The growth of Open Banking has been a UK-led marvel,” said Luke Kosky, fintech policy lead at Coadec.

“We have seen this industry grow to over £4 billion within 5 years and with proactive support and regulation, the possibilities for Open Banking are endless. However, we now face a critical sink-or-swim moment for the industry.”

The “sink-or-swim moment” relates to the future direction of open banking, which remains up in the air and Coadec directly blames “a lack of direction from Joint Regulatory Oversight Committee (JROC)”.

Set up over a year ago by the Financial Conduct Authority, the Payments Service Regulator, The Treasury and the CMA to decide on the future roadmap for open banking in the UK, JROC has yet to report its decision.

Earlier this year AltFi exclusively revealed that JROC’s strategic working group had found “limited agreement” among industry participants on the future UK direction of open banking.

“It’s crunch time for open banking,” said Andy Wiggan, chief product officer at GoCardless, commenting on Coadec’s research.

“The Government needs to seize the opportunity before us and act now. There’s a lot to do, but cracking on with establishing the 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.”

JROC is expected to publish its open banking roadmap as soon as this week, but it remains unclear how detailed or in which direction this will take the future of open banking in the UK.