2024 saw the UK achieve a great deal. We saw the completion of the Competition and Markets Authority’s (CMA) final roadmap for open banking, the introduction of the Data (Use and Access) Bill to Parliament, and the publication of the Government’s National
Payments Vision (NPV), all of which set a clear path for the future of open banking in 2025 and beyond. This includes the expansion to open finance and other smart data schemes.
With more than 11 million users of open banking in the UK, 11.5 million open banking payments processed each month, and a flourishing ecosystem, we are proud of the achievements we have made in just six years.
However, this is not a time to look back. We are at a key inflection point in our short history, and one which will see open banking move beyond a competition remedy and become a lynchpin in helping to deliver a digital and smart data economy.
Legislative framework
Key to this is the Data (Use and Access) Bill, which will establish the necessary legal framework to support the next generation of open banking, and can bring its data sharing benefits to other key economic sectors, including energy, finance (savings, pensions
and investments), retail, transport, home buying, and telecoms.
The Bill's provisions will enable data sharing to be both secure and efficient, fostering an environment where innovation can thrive, and consumers and businesses can benefit from greater choice in services. It also underscores the Government's commitment
to advancing the digital economy and enhancing the UK's position as a global leader in financial services.
The Bill will allow secondary legislation to be brought forward as part of the Long-Term Regulatory Framework and a future entity for open banking to be established, moving us from a competition remedy to a sustainable, commercial framework.
Looking further afield, the UK's centralised and regulatory-driven approach to open banking created a blueprint that has been emulated in more than 60 countries, demonstrating the need for globally recognised standards, and a central entity to monitor the
performance and interoperability of cross-border data flows.
Markets cannot operate in silos, and the UK is now in a strong position to collaborate and consult internationally. With data-enabled exports from the UK to the EU alone valued at £91 billion, the economic potential of a robust global standard cannot be
underestimated.
Empowering open banking through the National Payments Vision
The Government’s
National Payments Vision (NPV, also known as the Vision), published in November, set out how many of these opportunities could be delivered, detailing proposals to reform and modernise the UK's payment landscape, as recommended in Joe Garner’s
Future of Payments Review.
The Vision focuses on fixing perceived issues within the payment landscape, reforms to the regulatory framework and infrastructure delivery, and provides several welcome updates.
It outlines three key pillars designed to guide future activity – innovation, competition and security, and with 61 mentions of open banking throughout the document, we were delighted that the Government sees us as an important part of its mission to achieve
its goals. The NPV highlights a desire by the Government to make account-to-account payments a ubiquitous payment method, as well as the support for continuing progress in variable recurring payments (VRPs).
We also welcome the focus placed on driving further co-operation and collaboration across the payments sector through the newly formed Payments Vision Delivery Committee, and look forward to supporting its work, as well as continuing our close work with
policymakers and regulators to achieve the goals set out in the Vision.
Open finance for businesses and consumers
Open finance forms a vital part of the future of open banking, and according to a
report from the Centre for Finance and Innovation Technology (CFIT), delivering open finance and personal data mobility could boost UK GDP by £30.5bn a year.
While open banking has made significant progress, its benefits have so far been limited in scope, with Account Information Services (using bank account data to provide services like financial management, budgeting, or credit scoring) and Payment Initiation
Services (enabling third parties to initiate payments directly from a customer’s bank account). Open finance should extend these benefits to a wider range of everyday products such as mortgages, loans, pensions, investments and savings, and the Open Banking
Standard has been built in a sufficiently flexible way to readily incorporate the addition of these products.
This increased use of, and familiarity with, open banking-enabled products and services will expand access to tailored financial services, build consumer confidence with financial management, and expand access to affordable credit. In turn, this can support
financial education, resilience, and inclusion.
For many of the UK's small businesses (one in five of which are already using open banking), open finance offers further opportunities to enjoy productivity gains, delivered by more efficient accounts reconciliation, near real-time cash flow management,
and streamlined payments.
Importantly, it can also unlock borrowing for the UK’s 5.5 million small businesses, which face an estimated
funding gap of more than £22bn, limiting their ability to grow and scale. Over a quarter of SMEs which risked missing out on credit could get access to finance with enhanced data-sharing.
As well as speeding up access to business finance, CFIT’s report on SME lending recommends accelerating the standardisation of company information from Companies House, the provision of digital receipts from HMRC and improved access to tax data for approved
organisations, along with developing proposals for an e-invoicing scheme to align the UK with overseas markets. We look forward to seeing the next phase of the FCA’s work on open finance when published.
Commercial variable recurring payments (cVRPs)
The NPV also highlighted the role that cVRPs can play in transforming the payments landscape for consumers, merchants and billers.
The logical expansion of variable recurring payments for sweeping (VRPs), cVRPs promise to deliver greater control over payments for consumers and businesses and, over time, to deliver different retail account-to-account products and services.
The use of cVRPs by subscription services will also allow customers more control around repeat expenditure. By seeing what they are committing to, and when, they can avoid falling into the ‘subscription trap’ – paying for duplicate subscriptions or subscriptions
they no longer use.
The industry has already looked at initial use cases for the first wave, which will be products and services for regulated industries which already offer strong consumer protection, and where there are experienced billers. These include:
- regulated utilities and rail companies;
- central and local government departments and agencies;
- FCSC-protected financial services (not already covered by sweeping), mortgages and pensions; and
- donations to regulated charities.
We anticipate that industry will be ready to build and offer cVRPs to those firms covered by Wave 1 use cases and their customers from mid-2025.
Looking to the future
As digital wallets continue to grow in importance, their further integration with open banking would enable seamless and secure account-to-account payments, and could allow digital verification services to be embedded as a way to prove identity. Notably,
more than £259 billion worth of digital transactions were made in the UK in 2023, and two in five of these online purchases were using digital wallets. The National Payments Vision cited open banking as playing a key role in future retail payments, and we
are keeping a close eye on how it can integrate with digital wallets in the coming year.
While much progress has been made in open banking’s six-year history, 2025 potentially heralds the biggest leap yet. The implementation of cVRPs, the passage of the Data Bill, and advancement of the National Payments Vision, will provide a strong foundation
for the future. We are confident that the sector is the best placed it has ever been to deliver innovation. This, in turn, will deliver better outcomes for consumers and businesses, enable increased competition in the payments space, and support wider economic
growth.