Why do Open Banking Customers Continue to Drop off in the UK?
UK open banking has gone from an experimental concept to being amongst the world’s most sophisticated financial infrastructures today. With 13.3 million active customers and more than 31 million open banking-driven payments in March 2025 alone, the top-level numbers would seem to indicate that open banking is popular today. But beneath these high adoption figures hides a serious problem: retention.
Among neo-banks, lending platforms, fintech apps, and subscription services, there’s a hard-earned lesson being learned: it’s simple to gain open banking customers, but challenging to retain them. And that engagement-loyalty gap is becoming a widespread burden for product expansion.
In this article, we analyse the breakdowns of user experience, trust breaks, and infrastructure weaknesses that slow down the potential of open banking. We further reveal how better orchestration and back-end collaborations can help organisations overcome these breakdowns.
Adoption Without Loyalty
Open banking features, like pay-by-bank checkouts in a flash to budget planners and loan apps are coming to millions of consumers. But most use the feature once and never return.
“In open banking, your API may be live, but is your product really being used?”
Research from the FCA at the end of 2023 found that only 11% of UK consumers could clearly explain open banking. Things were worse again. Some intertwined it with scraping data, fear of losing control, or switching off flows simply due to unfamiliar branding or consent procedures.
This misconnection between infrastructure and real life is one of the reasons 20–25% of onboarding or payment flows are abandoned at authentication, according to OBIE’s 2024 UX audits.
Friction at the First Click
The most significant point of failure for open banking services in the past was authentication — the crucial first step when customers enter their bank account or approve a payment. But so much is occurring which is horrific redirects between third-party apps and bank portals, disconnected UI/UX between banks, or sudden Strong Customer Authentication requests that discourage users. And where authentication fails or seems to be complicated, the entire experience falls apart.
“The app asked me to log into my bank, but it looked off — so I just closed it.”
This is a frighteningly typical experience. While regulations dictate proper customer authorisation, they don’t prescribe anything around user-centric approach or even comfort around the process. And where fintechs are using infrastructure providers that don’t support branded, embedded experiences, the friction builds.
Payment processors like Transferty reduce early drop-offs by handling authentication flows better. The dynamic routing, white-label UI features, and secure redirect layers keep users within more comfortable, trusted branded spaces.
Loyalty Is Lost at the First Failure
A more fundamental problem is when something doesn’t work after something else works. A subscription doesn’t renew. A payment remains in “processing” for days. A refund request isn’t fixed. In the open banking stack, these kinds of things are usually caused by bank-side latency, API configuration, or incorrect consent tokens.
Customers don’t care about the technical root cause, though.
“It didn’t work. I deleted the app.”
According to PwC’s 2024 Fintech User Experience report, 63% of those experiencing a failure in a financial transaction will abandon the app altogether. The risk is that high.
Fintech customer support groups point out that as many as 50% of the tickets they receive are for payment status, refunds, or nonsensical results from a transaction. They are solvable, if only the backend was fault-tolerant.
Transferty delivers failover logic that dynamically directs payments in real time if one acquirer is down or behind. Their real-time transaction detection also equals more transparency. So apps can let users know when something’s going slower than it should, rather than not letting them know at all.
Trust Is Engineered
Maybe the biggest open banking issue that is least appreciated is user trust. Most fintech groups assume that because a process is secure and compliant, it will be trusted. But that is not how the human mind works.
A 2024 Which? survey found that only 14% of UK shoppers reported being in full control of their data when using money apps that connect to open banking. They largely have no idea what they are sacrificing, how to revoke them, or what is done with their data in between.
“I connected my bank account to take a look, then couldn’t figure out how to disconnect.”
This leaves lasting discomfort, and prevents re-engagement. If users believe they lost control without evident benefit, they will come no more.
Though not end-user focused, Transferty offers compliant, revocable streams of consent, user token secure storage, and predictable API behavior, all of which allow platforms to present more clear-cut, consistent, user experiences.
When Infrastructure Cracks, Everything Slows Down
Underneath the surface of many open banking products is a fragile chain of integrations. If one of those links in the chain breaks, whether it’s a bank API, an auth service, or an acquirer link, the whole payment flow lies down. That fragility is amplified when companies scale.
42% of British fintechs in a 2024 TechNation survey attributed infrastructure fragility as the key reason for not being able to scale past MVP. Whether payment disruption, settlement failure, or the inability to add international rails, the shared issue is the same: systems were never designed to scale.
Transferty’s cascading transaction flow, multi-acquirer capability, and smart routing logic all play together to address this concern. For scale-up products, it can be 99.5% availability versus full user drop-off under load.
The Industry Predictions
In the coming years, open banking’s expansion to open finance will heighten the customer demand. As clients link not only current accounts but also savings, pensions, insurance, and investment schemes, their expectations shall only increase.
Open finance will cover more than 25 million UK consumers by 2028, with VRPs processing more than £2.5 billion per month. But such figures will be attained only if customers remain active.
Winning at open banking’s future is:
- Building unseen but strong foundations;
- Enabling consent and UX experiences to be intuitive and secure;
- Partnering with providers that offer performance, compliance, and reliability.
Reliability = Retention
The customer doesn’t care about the letter that follows your product. They care about speed, they care about trust, and if it works each time. The best fintech experiences are the ones users forget are even happening — because they just work. At this point, every business faces a critical choice: whether to have your own payment stack or subcontract to a third-party provider.
Build In-House Advantages:
- Complete control over all layers of the stack;
- Potential to customise for niche use cases;
- Direct access to data, which is perfect for analytics and optimisation.
Disadvantages:
- Extremely lengthy development cycles;
- Endless high maintenance costs;
- Risk of exposure to compliance risk;
- Requires in-house payment, security, and API reliability expertise.
Partnering with a Payment Gateway:
- Fast time-to-market;
- Pre-configured PSD2/PSD3, FCA, and SCA compliance;
- Access to proven and tested functionality like smart routing, cascading;
- Inbuilt fraud and chargeback management.
- Technical support and scalability in markets.
For businesses that require to scale fast, stay compliant, and deliver tailored payment UX without building from scratch, Transferty offers a high-performing gateway. From simplifying authentication to failover protection and multi-currency flexibility, Transferty enables companies to outsource complexity and focus on growth.
To build a product of that sort, you need something more than compliance. You need reliability. You need Transferty.
