UK open banking's growing provider network faced an authentication test
As more open banking services reached customers, reliable bank authentication became a commercial priority. Providers still needed to turn account access into work that customers valued.
The Open Banking Implementation Entity's October 2019 figures showed 188 regulated providers and 58 regulated entities with at least one proposition live with customers. The supply of connected financial services was growing. Whether customers could reliably move from choosing a service to using it remained an open commercial question.
OBIE's accompanying work on customer experience identified some of the obstacles. Authentication had improved, but unnecessary screens and inconsistent bank journeys remained. For startups, market access and usable distribution were becoming separate problems to solve.
What the provider counts actually measured
The snapshot at the end of October divided the ecosystem into 123 third-party providers and 65 account providers. A month earlier, the corresponding totals were 116 and 64, with 53 regulated entities offering at least one live proposition. Both reports used the same descriptions, allowing a useful comparison of the expanding network. Five more entities had a live service. Each could offer several propositions, so this did not measure growth in the number of apps.
| Period or category | Regulated entities |
|---|---|
| 30 September 2019 | |
| 31 October 2019 |
OBIE counts of regulated entities with at least one proposition live with customers at the end of each month. The snapshots measure entities, not individual users, apps or completed payments.
Dividing live entities by all regulated providers would not produce a reliable launch conversion rate either. These were snapshots containing different roles, not a tracked cohort progressing through a common funnel. A venture investor could use them to establish that more organisations were putting services into use, then ask a separate set of questions about a particular startup's customers, transaction frequency and revenues.
Infrastructure participation offered only limited evidence of customer behaviour. Registration made a provider visible in the ecosystem. A live proposition established another step. Neither number established how often a household or business returned after making its first connection.
The bank still owned part of the journey
OBIE's customer experience update identified app-to-app authentication and its Customer Experience Guidelines as important parts of the standard. App-to-app authentication allowed a person to authenticate in the bank's mobile application, often using biometrics. The intended benefit was practical: a customer should be able to authorise access without navigating a confusing sequence of screens or entering an unfamiliar process.
OBIE reported a significant improvement in journey completion after the third version of the standard, introduced in September 2018. It did not publish a numerical improvement in that article. It also identified remaining unnecessary steps in journeys for account information and payment initiation. Some implementations of measures to prevent fraud added steps even for payments presenting little risk. OBIE supported reducing fraud while arguing that implementation needed to reflect risk.
For a startup, this meant a polished application could still lose customers when handing authentication over to the bank. Completion needed to be examined by supported bank and device, alongside failure reasons and support requests. OBIE did not supply those operating figures. Its remediation plans with the largest banks showed that work to make journeys consistent was still underway.
A bank connection needed a job to do
The provider report listed Xero's UK entity among organisations newly live with customers and highlighted bookkeeping, mortgage applications and connections between financial and accounting services. These examples showed that open banking could sit inside an existing workflow. They did not, by themselves, quantify the revenue or customer outcomes of any named provider.
For a business customer, importing transactions could be valuable when it removed repeated manual work from reconciliation or cash planning. A connection that merely displayed a balance might be less compelling if that information was already easy to obtain. The startup's product decision was therefore about the next action: what the customer could now complete, how much checking remained and whether the result fitted the system used by its accountant or finance team.
This also shaped distribution. A provider embedded within accounting software could meet a user at the moment financial data was needed. A standalone service might have to acquire that same user before explaining the benefit of connecting a bank. Neither route guaranteed better economics. The relevant comparison included acquisition costs, partner dependence, support effort and the frequency of the underlying task.
Scale depended on a repeatable service
The growing network created room for both focused applications and infrastructure suppliers serving other financial businesses. But the burden differed. An application had to make the customer outcome clear and worthwhile. An infrastructure company had to make multiple integrations dependable enough that its clients could promise a service in turn. Standardisation helped define interfaces while leaving performance, maintenance and customer support to be delivered.
The capital plan should reflect that distinction. A team could reach a technically live connection before it had sufficient monitoring, failure recovery and operational support for a larger customer base. Pricing needed to cover those recurring obligations as well as the initial engineering work. Otherwise, higher usage could increase service costs faster than the value captured from each account.
The evidence showed progress alongside unresolved delivery problems. More regulated entities had live propositions, and authentication was improving while specific defects remained. For a founder, successful authorisation needed to lead to a service customers used repeatedly, at a delivery cost the business could sustain. That evidence was more useful for evaluating the company than the ecosystem count alone.
Investment implications
- Counts of providers with live services showed an expanding ecosystem, without establishing consumer numbers or product retention.
- Authentication performance depended partly on the customer's bank, making integration quality a commercial dependency.
- The strongest product case connected financial access to a repeatable task such as bookkeeping, reconciliation or payment collection.
Sources
- Open Banking August – September Highlights (opens in a new tab)
Open Banking Implementation Entity
- Open Banking October Highlights (opens in a new tab)
Open Banking Implementation Entity
- Open banking – improving the customer experience (opens in a new tab)
Open Banking Implementation Entity
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