The open banking landscape in the UK witnessed a robust start in 2024 but requires further bold strategies to overcome existing challenges.
- In January, open banking payments reached an all-time high in the UK, marking strong initial progress.
- The unrestricted growth saw user numbers soar to 11.3 million by July, a doubling from 2022 figures.
- Despite this momentum, regulatory congestion has slowed further advancement, leaving key questions unanswered.
- The National Payments Vision offers some direction, but more decisive regulatory support is needed for continued growth.
In January 2024, the open banking initiative in the UK hit an unprecedented peak with record payment levels. This momentous achievement indicated a promising start for the financial sector, highlighting the potential that open banking holds to revolutionise the way transactions are conducted.
By July, the sector reached an impressive milestone, with user numbers climbing to 11.3 million. This surge represented a 12% increase from the previous month and demonstrated a doubling of users since 2022. The rapid increase in adoption suggests that consumers are increasingly recognising and utilising the benefits of open banking.
However, the journey has not been without hurdles. The pace of progress has been hindered by significant regulatory congestion, an issue that needs to be addressed to sustain the current growth trajectory. Going into 2025, the sector faces critical questions that remain unanswered, posing a challenge for further advancements.
The National Payments Vision, a recent publication, offers a glimmer of clarity amid these challenges. While it provides some direction, the document indicates that more concrete regulatory measures are necessary to facilitate the continued success and expansion of open banking.
The completion of the UK’s Roadmap for Open Banking means all major banks have rolled out Variable Recurring Payments (VRP) for internal transactions; however, the commercial adoption of VRPs has languished, primarily due to being optional rather than mandated. If regulators were to enforce the integration of this capability into bank APIs, the potential for broader commercial VRP usage could be substantial.
The open banking sector in the UK needs decisive regulatory actions in 2025 to ensure continued growth and overcome current obstacles.
