Recent research conducted by the Coalition for a Digital Economy (Coadec) has cautioned that the open banking industry is at a ‘vital crossroads’.
According to Finextra, the policy group based its analysis on data from 82 FinTechs active in the sector. The value of the ecosystem was determined by the post-money valuations of firms that raised venture capital funding between 2009 and 2022.
In 2022, the open banking sector in the UK raised over £886m and the median value of a UK open banking firm in the period was found to be £16m.
The report detailed that open banking has been a success in the UK so far, with more than seven million users and 50% of SMEs having found to have used open banking services.
Despite this, Coadec said that the industry is at a ‘critical juncture’ and is calling for urgent clarity on the future regulatory direction of open banking in the UK.
Last year, Coadec and 17 FinTechs sent a letter to the FCA stating that while the UK’s progress on open banking was once ‘the envy of the world’ its future has now been found to be uncertain due to a lack of direction from Joint Regulatory Oversight Committee.
Coadec said that while the JROC is expected to lay out its vision for UK Open Banking over the next week or so, it is still unclear what the immediate next steps will be.
Coadec FinTech policy lead Luke Kosky 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 £4 billion within 5 years and with proactive support and regulation the possibilities for open banking are endless.”
Research from Yapily last year found that open banking maturity is growing across Europe, with the UK leading the charge for the second consecutive year.
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