According to data submitted to the Competition and Markets Authority (CMA), as of February 2021 there are now over three million users of open banking in the UK with 301 firms offering open-banking-enabled products and another 450 firms with open banking in the pipeline. This represents phenomenal growth as more people looked to manage their finances online from the start of the Coronavirus pandemic, comparing to one million active users in January 2020.

Our latest insight follows the release of our Open Finance ratings and looks at open banking, what it means for workplace pensions, and which providers have launched open-banking-enabled products since the launch of the open banking initiative in 2016. 

According to the Open Banking Implementation Entity (OBIE), the organisation setup by the CMA to deliver open banking in 2016, the final components of open banking are now falling into place, and it is only a matter of time until tens of millions of UK users are benefiting from products powered by open banking.

Financial information belongs to the consumer, and open banking is designed to put them in control of it. At the heart of open banking is the ability for users to authorise regulated third parties to connect to their banking, and other financial products in a safe and secure manner. The UKs Open Banking Standards are comprised of technical API specifications (the security and messaging standards necessary for the transfer of sensitive financial data), customer experience guidelines, and operational guidelines (the performance standards required of the technical infrastructure). Together these allow banks, financial institutions, and authorised third parties to connect in a common and secure way.
This approach can grant consumers to access a convenient and wide view of their finances on the platform of their choice, as well as providing easier switching and greater payment options.

With the UK being the first country to mandate open banking, it is not surprising that several UK-based workplace pension providers are also blazing a trail when it comes to open banking and enabling members to see their pension schemes alongside other aspects of their finances.

Our data shows that open banking is still not that common in the workplace pension market, with only five companies offering the service. This insight will look in greater detail in what Intelliflo, Mercer Master Trust, Scottish Widows, Standard Life and True Potential can offer.

It is not surprising to see Scottish Widows offering this service as their parent (Lloyds Banking Group) is the UK’s largest financial services group and was one of the first UK banks to adopt open banking. It is very proud of the APIs it has developed and partnerships the bank has formed with other businesses and developers to deliver open banking as broadly as possible to their customers.

New to the market are Intelliflo, who have extended their existing Personal Finance Portal capability to support financial wellness services for pension providers and advisers, and Standard Life with their new Money Mindset platform have embraced open banking in a big way with an impressive range of connectivity and functionality.

All five providers can currently use open banking technologies with bank/current accounts and with credit cards. All other than True Potential can also currently use open banking technologies with savings accounts.
However, accounts owned by other members of the family is an area where workplace pension providers do not currently offer much support. Only Intelliflo and Standard Life are able to include a partner’s bank accounts. Joint accounts are slightly better supported with the open banking solutions from Intelliflo, Scottish Widows, Standard Life, and True Potential able to include them.

Bank connectivity is a much more patchy picture. We asked the workplace pension providers who support open banking which providers they can connect with:

As you can see in the table above, Standard Life and Mercer Master can impressively connect with all the bank providers we questioned them on. Mercer and Standard Life have obviously spent a lot of time and effort making sure their API is as widely connective as possible.

Intelliflo also boasts a wide range of connections with banking providers. Scheme members can only not connect with accounts from Standard Chartered, Metro Bank and Tandem Bank. True Potential also has a fairly wide range of connections with connections to two thirds of banking providers.

Scottish Widows are slightly less connected as they can only connect with just 44% of banking providers. Whilst they have connections with most of the traditional high street banks, it would seem the Lloyds Banking Group has not forged open banking connections with challenger banks.

The banking providers who have connections with all five of the workplace pension providers offering open banking solutions are the majority of the high-street banking giants: Barclays, HSBC, Royal Bank of Scotland, Lloyds Banking Group, Santander, Nationwide, NatWest and Halifax.

One of the core uses for open banking technology is assisting consumers when it comes to understanding their spending and help drive better personalised financial outcomes for the end user. In order to do this effectively with data presented in a manner clear for the user, workplace pension provider’s open banking solutions need to have access to a statistically meaningful amount of categorised transaction history data.

Our data shows that two thirds of workplace pension provider’s open banking solutions receive 12 months of transaction history once an account has been linked to their personal financial management portal. Users of the portals from Scottish Widows will only have 3 months of transaction history.

Once transaction history is captured, the portals from all five providers automatically categorise each transaction based on a merchant code. Mercer Master Trust, Standard Life, and True Potential can support an unlimited number of spending categories. Scottish Widows support less than 50 categories. Intelliflo supports less than 30.
Other than True Potential, all providers include shopping, entertainment, dining out, rent/mortgage, utilities, savings, transport, groceries and “general” amongst their categories by default. True Potential offers a narrower range of default categories which do not include shopping, dining out, rent/mortgage or the catch-all “general”.
Users of the open banking portals for Mercer Master Trust and True Potential can also add their own categories to the list.