Open banking in the UK showed promising growth and potential in 2024, but significant challenges remain. Here are the key developments and issues facing the sector as it moves into 2025.
- Open banking hit a record high in payments and increased user numbers in 2024.
- Key regulatory challenges slowed the momentum despite a full roadmap completion.
- Variable Recurring Payments for personal use are implemented, but commercial adoption lags.
- Urgent need for API mandates to unlock the full potential of commercial VRP.
- Future growth requires decisive regulatory actions and new strategic directions.
Open banking demonstrated substantial progress in the UK during 2024, marking significant milestones such as record high payment figures in January and a rise in users to 11.3 million by July, a 12% increase from the previous month and double the number since 2022.
Despite these achievements, the sector faced considerable hurdles, particularly in terms of regulatory congestion, which has slowed down its advancement and clouded its future course entering 2025.
All CMA9 banks have successfully rolled out Variable Recurring Payments (VRP) for sweeping, which means transactions can now occur between accounts owned by the same individual, thus streamlining personal finance management.
However, unlike personal VRP, commercial adoption remains stagnant, primarily because its implementation is currently optional and the regulatory bodies have not mandated banks to incorporate this into their APIs, limiting broader commercial use.
Looking ahead, the recent National Payments Vision (NPV) offered some clarity, but to truly elevate open banking to its next phase, decisive regulatory actions mandating the necessary API developments are crucial.
For open banking to thrive in the coming years, proactive regulation and comprehensive strategic planning will be essential.
