Marking Seven Years of PSD2: The Continued Evolution of Open Banking

Open banking is a vital part of the modern financial landscape, and this year holds particular significance for its advancement. This month marks the seventh anniversary of the UK's adoption of PSD2, the framework that supports open banking across the European Union. Additionally, the Data (Use and Access) Bill is moving through Parliament, further enhancing and regulating open banking initiatives.

As we navigate this important year, the industry should focus on four key areas. The first is around supporting regulatory developments. Effective regulation, such as the Data (Use and Access) Bill, provides a solid foundation for open banking to thrive. Revisiting certain processes, like the 90-day reconsent requirement, could also enhance consumer benefits.

The second is around investing in technology and infrastructure. Continuous improvements in open banking standards, technology, and infrastructure are necessary for growth and efficiency. Financial organisations should look to upgrade their IT systems and enhance API capabilities to support these advancements.

Educating consumers about open banking is also crucial. The industry must continue to inform people about the benefits and functionalities of open banking, helping them understand how it can improve financial management, offer personalised services, and enhance overall financial well-being.

Lastly, collaboration between traditional banks, fintech companies, and other financial service providers is key. By working together, the industry can develop innovative products and services that leverage the strengths of each organisation, driving the growth of open banking.

Focusing on these areas will unlock the full potential of open banking, transforming customer experiences and promoting financial inclusion. Open banking democratises access to financial data, allowing individuals with limited credit histories to access services that were previously out of reach.

In addition, secure data sharing enables consumers to benefit from more personalised and efficient services. For example, loan approvals are now faster and more accurate as lenders can quickly verify financial information through APIs. It isn’t just the financial services industry taking advantage of open banking. The utilities sector is leveraging open banking to quickly and accurately assess customers' eligibility for social tariffs, eliminating the need for bank statements and tracking changes in affordability to provide appropriate support.

In 2025, open banking remains a cornerstone of the financial services industry. Its ability to drive innovation, enhance customer experience, and promote financial inclusion makes it indispensable. As we celebrate the seventh anniversary of open banking, its influence is set to drive the evolution of the financial sector well into the future.