Gerald Chappell, Chief Executive Officer and Dr Michelle He, Chief Operating Officer
Open Banking empowers people to leverage their previously inaccessible banking data to gain access to more personalised products. For Render, this allows us to provide better, smarter financial products for a larger, more diverse range of people, including those previously “credit-invisible”.
Aggregated Open Banking data also provides the opportunity to spot national trends across billions of individual financial transactions. That’s why we developed this inaugural Render Report.
Open Banking is a simple idea — it allows anyone to securely share their data in order to access the most suitable products for them. The data is a record of your financial life, and it’s your property as much as the banks' property. So, we think the benefits that flow from it should be shared.
Open Banking is a simple idea, but what we can do with and learn from it is extraordinary. From building new services and transforming how millions of people manage their money to helping unlock and understand our economic lives.
It’s unsurprising, therefore, that British businesses and households are choosing the transparency and convenience that Open Banking offers in incredible numbers. 7 million companies and consumers in the UK already use it, and last year alone, we witnessed the doubling of total Open Banking payments, with over 11.4 million payments in July 2023.
At Render, we use Open Banking to make lending safer and more affordable. Other companies use it to provide budgeting tools, prevent fraud and enable cheaper, faster third-party payments. And new applications are emerging all the time.
Last year, we set ourselves a challenge: to explore Open Banking data in even more ways. We began to pull together what we thought were interesting insights from our data. The data was always anonymised, and we looked at trends, not individuals.
We asked ourselves: What could we see in the data that people want to know; what news stories and public debates could we help inform and explain by looking at and analysing the millions of bits of data we see?
We looked at changing habits, from shopping to the transformation of nightlife. We also investigated how housing expenses are increasing and sought to understand how people were reacting to the cost-of-living crisis more generally. We looked at an older form of payment, cash, to try and understand its enduring resilience as well as a brand new and innovative form of finance called buy-new-pay-later, asking how the market is maturing and what benefits and risks it brings.
All our insights are based on the people who choose to use our Open Banking service, by applying for a loan via our platform with our sister company Abound (a B2C lender). The insights do not represent the entire population – no one bank’s would – but they are statistically significant because of the sample size.
We would therefore like to thank all of our customers and their commitment to game-changing financial services for making this report possible.
We began the research for this report by selecting hypotheses that reflected anecdotal feedback we had heard but that we wanted to validate by diving into the data.
The insights that emerged can be broken into three main areas:
What first struck us was the counter-intuitive nature of some findings. For example, while online shopping had been supercharged by the pandemic and seemed “the new normal”, the surge in cyber shopping reversed in 2023.
Part of the explanation perhaps lies in the cost-of-living crisis, as weal so found more people shopping at discount stores like Poundland, Aldi and Lidl, which do not have the same online presence as many other retailers.
Following the pandemic, it seems, people were also keen to start going out again for leisure. And once again, we uncovered another counterintuitive trend – that subscriptions to streaming services like Netflix, Disney+, and Amazon Prime Video had increased by 9%, even while cinema ticket sales increased by nearly a third (29%) in 2023.Maybe entertainment isn’t the zero sum game it was purported to be.
Buy-now-pay later has made many headlines. Some people consider it innovative and responsive to consumer needs, and others view it as risky and controversial. We looked at the product with an open mind, to understand how people are using it, why people like it, and where the risks might be.
Finally, the much debated “demise of cash” was not confirmed in our data, with physical payments retaining a solid foothold in the UK. We found that 62% of people still take out cash every month, and only 3%are living totally cashless despite the rise in popularity of contactless payments.
So, it would seem the picture of many peoples’ finances is a more nuanced one that is often thought to be the case. We hope you enjoy discovering more about it in this report.
The alternative payment method BNPL has seen unprecedented growth in recent years, positioning itself as a significant player in the credit market.
Our study of Open Banking data revealed how the market has diversified and matured as it competes with, and potentially begins to displace, more traditional forms of short-term credit, such as traditional credit cards.
BNPL emerged as a response to evolving consumer preferences, offering flexible credit solutions by allowing users to make purchases and spread payments over time. However, the sector remains largely unregulated in the UK and has attracted controversy due to concerns it can lead to some people spending irresponsibly.
Headline findings:
1. Monzo captures almost 20% of the BNPL market within just one year.
2. 51% of 7,500 customers analysed, known to be using BNPL, did not have these transactions reflected on their credit reports.
3. The average BNPL transaction count increased for all age groups.
BNPL's meteoric rise has been exemplified by a notable player in the financial landscape—Klarna, whose name has become synonymous with the service in the UK.
However, our research confirms that Monzo is now challenging Klarna’s market dominance. The well-known online bank has swiftly transformed into a major BNPL provider, with our data indicating they could have captured an astonishing 20% of the market within a year. The success can be attributed to Monzo's 'Flex' BNPL product, offering payment flexibility beyond vendor restrictions, setting it apart from many other BNPL options.
Whilst diversity and increased competition are almost always good for consumers, it will come as a surprise to many that Monzo has become a credit provider in this potentially controversial market.
Changing spending habits
We also found the average transaction count had gone up for all age groups among BNPL customers in the population and time frame studied. This suggests that BNPL is being used to fund more, smaller purchases rather than large single-ticket items. This suggests the increasing adoption of BNPL for routine expenses.
Hidden Debts: The BNPL Credit Conundrum
The Render Report also took a look at the credit rating data for 7,500 customers, who we could see were using BNPL thanks to the OB data. Despite BNPL constituting a form of debt, we discovered it often does not appear on credit reports. Over half (51%) of the 7,500 customers studied between 2022 and 2023 did not have these transactions reflected on their credit reports at all. This discrepancy raises concerns about accurate debt assessment for lenders relying on traditional credit checks.
Gerald Chappell, CEO and co-founder of Render & Abound, said:
“The BNPL market has provided well for new and emerging consumer preferences and many consumers look to be using BNPL to help them to spread their monthly costs.
“There is a perception that BNPL is for occasional big-ticket items. But BNPL is now used by millions of people and, according to our data, they use it increasingly frequently for routine expenses.
“It is incumbent on all financial services businesses, established and emerging, to foster responsible lending practices and we note several players in the BNPL sector have been—rightly—calling for more government regulation and responsible practices.
“As BNPL secures its place in the financial landscape, challenging traditional credit models, we believe it becomes imperative to address the hidden credit risks associated with this burgeoning market.”
Key insights
1. Our data indicates Monzo has taken a large chunk of the BNPL in a short period, transforming the online bank into a major BNPL player, and increasing the diversification of the BNPL market.
2. The fact that BNPL is not appearing on many credit reports indicates another potential gap in traditional credit reporting, increasing their inaccuracy and the risk for lenders and borrowers.
3. As people use BNPL for smaller transactions, this indicates BNPL’s adoption for routine expenses rather than its occasional use.
The shift from physical to online shopping is often discussed. It’s a trend visible on almost every high street in the UK, too, with many stores closing and buildings lying empty. And it accelerated rapidly during the pandemic.
The convenience of shopping from the comfort of one's own home, combined with the wider range of online products and the ability to compare prices easily on a screen in the palm of your hand, Makes the shift understandable.
However, some retailers have been able to adapt to the changing market, by offering leisure activities or an “experience” for shoppers or by adopting "click and collect" services.
So, how has the trend continued after the pandemic, and is it more pronounced in different areas of the UK?
Headline findings
1. Average online spending per person is down by 3% compared to last year.
2. But average high street and supermarket spending has increased by 5%.
There has been a surprise decrease in average monthly online spending in the past year, falling by 3% year-on-year to September 2023, as offline expenditure rose by 5% over the same period.
When breaking this down regionally, the move to shopping offline compared to online is particularly true for Londoners. High street spending increased significantly in London (up by more than £5) between September 2022 and September 2023. Still, it was relatively stable elsewhere (up by just 38 pence), meaning the capital city was responsible for driving the average national increase.
These two trends look like a surprise bounce back—or at least a slowing decline—for physical and high street spending after the pandemic, concentrated in London.
Gerald Chappell, CEO and co-founder of Render & Abound, said:
“Earlier in the year, we saw online spending overtake high street spending in London for the first time. It seemed like a tipping point. So, it’s surprising to see average online spending falling now. Things have tipped back. “There are regional differences, but on average, people are now spending more in physical shops than online.”
Key insights:
1. 5% increase in high street and supermarket spending in 2023 while online spending dropped by 3% on average
2. Spending at discount stores increased rapidly throughout 2023; this includes shops like Poundland, Aldi and Lidl
3. The average amount spent on the high street stayed roughly flat in 2023 outside of London, while in the capital, people spent more on the high street compared to 2022.
Findings were based on an anonymised sample of 50,000 people who use Open Banking through Abound’s platform. The analysis was undertaken in November 2023, looking back over 12 months.
According to recent studies and reports in the media, the use of cash in the UK has been declining steadily over the past few years. More people increasingly opt for digital payment methods such as debit and credit cards, mobile payments, and online banking. For example, one report by UK Finance found that cash payments fell by 35% between 2017 and 2019 and are projected to decline by a further 30% by 2022.
The prevailing narrative is that the decline could be terminal, and the social and practical consequences of the shift to digital payments have been hotly debated, with prominent questions asked about how older people might have to adapt.
But how many consumers are still using cash machines, according to the Open Banking data?
Headline findings:
1. The vast majority of people (62%) still take out cash every month
2. Despite the rise in popularity of contactless payments, only 3% are living completely cashless
3. The withdrawal of cash has increased since the coronavirus pandemic.
We looked at bank withdrawal data, which customers had consented to share. Despite the surging popularity of contactless payments in the UK, we discovered that only just over a third (38%) of people were not using a cash machine monthly.
Our data shows that the UK is still heavily dependent on cash payments, as over 80% of people had used an ATM at some point in the last two months.
While thousands of cafes, shops and restaurants have moved to contactless payments in the past few years, our data revealed only 3% of people have not used an ATM in the last 12 months.
Michelle He, COO and co-founder of Render & Abound, said:
“While going contactless and paying with smartphones, like Apple or Google Pay, has become the default at many businesses since the coronavirus pandemic, our data indicates that cash remains extremely popular – and could be bouncing back.
“As the cost-of-living bites people’s incomes, it could be that people may be using cash to reduce their spending – as it’s much easier to see physically where their money is going, as well as a natural rebound as peoples' lives return to normal following the pandemic.
“Our analysis revealed the UK is far from being a cashless society, as mostly older generations continue to use ATMs frequently, whereas younger people living in London are the most likely to go out with a thinner wallet.”
Key insights:
Our large-scale analysis of ATM usage found several insights into the cash habits of British people, such as:
1. Younger people are almost as likely to use cash as older people. Annual cash usage for those under 30 is 96% versus 98% for those over 40.
2. The percentage of people who withdrew cash monthly is high (62%), although this is 3% lower than last year.
3. However, the percentage of people who live entirely cashless is lower this year (3%) compared to last year (5%).
This data is based on an anonymised sample of 50,000 people who use Open Banking through Abound’s platform. The analysis was undertaken in November 2023, looking back over 12 months.
During a cost-of-living squeeze, it is common for consumers to cut spending on so-called non-essentials, which has included, especially in recent years, streaming subscriptions.
At the beginning of 2023, several headlines described how British households cut “millions” of subscriptions to services such as Netflix, Amazon Prime Video and Disney+ in 2022.
However, over the year, the streaming services bounced back by bringing in tighter rules around password sharing.
And it’s worked. Netflix is seeing more people subscribe than ever before as a result of no longer being able to share accounts.
But this hasn’t meant people are not going to the movies. Quite the opposite – the big screen’s popularity has jumped up.
Headline findings:
1. Subscriptions to streaming services like Netflix, Disney+ and Prime Video increased by 9% in 2023
2. The number of people attending the movies increased by 29% in 2023.
So what’s going on?
It’s thought that thousands of households did indeed cancel subscriptions to their streaming services to save money as rising inflation continued to pile pressure on people’s budgets in 2022.
However, while streaming TV and movies were found to have decreased, our research found that the impact of companies like Netflix cracking down on password sharing has led to more new customers subscribing or resubscribing.
Yet, perhaps unexpectedly, this has not had a negative impact on the big screen, which for the second year running in our data has seen a huge increase in visitors – with nearly a third more people going to the movies in 2023.
Gerald Chappell, CEO and co-founder of Render & Abound, said:
“With many households’ expendable income taking a significant hit during the past two years, it’s no surprise that monthly outgoings, such as subscriptions, have been cut. However, decisions by the streaming services to crack down on avoidance have helped them retain paying members.
“But, people are still prepared to spend a little on getting out of the house. This might help why we have seen a huge increase in ticket sales, likely helped by 2023’s huge movie events, like ‘Barbenhiemer’.”
Key insights:
1. The number of people spending on streaming services increased by 9% in 2023 after seeing a drop of 20% in 2022
2. The number of individuals buying cinema tickets each month more than doubled in 2022, and further increased in 2023, going up by 29%
Findings were based on an anonymised sample of 50,000 people who use Open Banking through Abound’s platform. The analysis was undertaken in November 2023, looking back over 12 months.
If 2022 was a year of inflation hitting people’s shopping baskets, 2023 was the year inflation hit people’s housing costs, exacerbating an already difficult rental crisis and impacting both first-time buyers and existing homeowners.
Our data shows that monthly mortgage and rent payments increased steadily in 2023, the highest of which can be traced back to the then Prime Minister Liz Truss’ infamous ‘mini-budget’ – where we saw the highest spike in monthly mortgage costs for people.
Throughout 2023, with inflation everywhere else, we noted increasing rental costs – going up by 5% over six months in 2023 – and a higher proportion of people renting rather than paying mortgages.
Headline findings:
1. When comparing January vs September 2023, we saw monthly mortgage payments increase by 5%
2. Monthly rent payments increased by 11% year-on-year
Michelle He, COO and co-founder of Render & Abound, said:
“The UK’s housing market is certainly in a rut, with it likely going to be a key policy issue as we head into the general election.
“From our data, we can see that it’s a bleak picture in the UK. Average monthly spend on a mortgage we see is more than £860 a month – a few years ago that sort of average amount would have been unheard of for most people in the UK.
“But while mortgages are bad, the group we can see getting stung by housing inflation is renters – who are also the ones with fewest protections in place and financial fallback. Our data shows the average monthly rent is nearly £970 – some £100 higher than a mortgage.
“In the UK, we obviously have big challenges ahead about how to fix this disparity, as with renters paying more than a homeowner, how will those renters ever be able to save for their deposits?”
Key insights:
1. Average monthly rent amount in 2023 hit £968, up from £875 in 2022 –an 11% increase.
2. Mortgage payments, in comparison, actually reduced, going from £895 per month in 2022 to £864 in 2023.
3. The Liz Truss ‘mini-budget’ led to a spike in mortgage costs; however, by January 2023, these had calmed down, though they still increased by 5%.
Findings were based on an anonymised sample of thousands of people who use Open Banking through Abound’s platform. The analysis was undertaken in November 2023, looking back over 12 months.
What did we learn?
The report's focus on key areas such as changing consumer behaviour, the impact of the cost-of-living crisis, and surprising trends like post-pandemic leisure spending sheds light on the evolving financial landscape of the United Kingdom.
One of the key findings was that the surge in online spending reversed in 2023, with high street and supermarket spending bouncing back. Surprisingly, despite subscriptions to streaming services like Netflix and Disney+ still increasing, the number of people buying cinema tickets increased by a third. This suggests that people were willing to spend on out-of-home entertainment even if they were spending more on subscription services.
Amid the cost-of-living crisis and changes in retail, an entirely new way of paying (and acquiring credit) has become established in the UK: BNPL. Our report revealed how a major new BNPL provider has suddenly emerged—the online bank Monzo—and how BNPL spending is often not included in credit scores. This raises some difficult questions about risk.
Meanwhile, customers are changing how they use BNPL, with indications it is becoming more routine and not just for occasional or unusually expensive items.
The report also highlighted a clear upward trend in housing costs. Despite a brief moderation after the ‘mini-budget,’ mortgage expenses continued to climb steadily. This aligns with the substantial 11% increase in monthly rent payments, illustrating the persistent financial challenges in housing. Furthermore, 2023 demonstrated a significant and sustained rise in housing costs, impacting both renters and homeowners.
Finally, the report challenged the prevailing narrative of the demise of cash, revealing that most UK residents still use cash regularly. This data indicates that while digital payment methods are popular, physical cash remains an essential part of the financial landscape, particularly for older generations.
The Render Report showcases how Open Banking data can provide valuable insights into consumer behaviour and economic trends. It emphasises the importance of government support during difficult times and challenges assumptions about spending habits. These findings hopefully also provide a foundation for businesses and policymakers to make informed decisions about the future of financial services in the UK.
What next?
Open Banking is set to continue to grow and enhance financial inclusion, advance the personalisation of banking services, and spread to more countries. This will allow new groups of consumers in more parts of the world to securely access and share their financial data and use a broader range of personalised financial tools.
In Render’s (and Abound’s) case, we are building a more accurate alternative to credit scoring to help underserved populations access loans at more affordable rates. These often financially excluded groups can also gain access to insurance and other financial products thanks to Open Banking.
As this happens, and the numbers and the diversity of people using Open Banking grows, the amount of data and the insights that it is possible to draw from it will also develop and become richer. One day, the insights drawn from Open Banking data, we are confident, will become an essential tool for policymakers, economists, politicians, and academics.
The Render Report was an early and sometimes light-hearted attempt to demonstrate the power of Open Banking data, and we hope it will inspire others to study and develop this area further.
Findings for each of our chapters derive from analysing the data belonging to those who have consented while using our service and are strictly anonymised to protect customer privacy. Using Open Banking, Abound/Render can securely view billions of data points, using our tools to break down spending and income across hundreds of categories, going back over the past 24 months.
About Render
Render is an AI-powered credit technology platform that scans customers’ Open Banking data to instantly calculate how much they can afford to borrow. This contrasts with traditional Credit Scores, which are often right on average but are wrong in virtually every individual case.
Render enables companies to make smarter credit risk decisions and reach more customers, including those who are 'credit invisible’.
Render also enables lower interest rates for customers as borrowing is less risky and fewer customers default than the industry standard. Render is already helping a wide range of clients, ranging from IVF insurers to mortgage providers, to make smarter credit decisions. The technology has been tested on more than 5 million credit decisions and reviewed over 3 billion banking transactions.
About Abound
Render was developed by Abound, the pioneering Open Banking-powered lender.
Abound currently offers loans between £1,000 and £10,000 repayable for up to 5 years with a 25.8% APR (representative).
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