Open Banking offers the opportunity for the development of new solutions in payment services that increase competition, foster innovation and benefit customers.

However, despite reaching some notable milestones since its inception in 2018, Open Banking has not yet fulfilled its promise to create a revolution in financial services and there are a number of structural features that has made penetration in the payments sector more difficult.

In December 2022, HM Treasury, the Competition and Markets Authority (CMA), the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) published a Joint Statement to update on the future of Open Banking. 

In this insight, we look at the progress of Open Banking in payments to date. We also summarise the key priorities identified the Joint Statement and consider the impact that the next phase of UK Open Banking may have on the payments sector.

Open Banking

From its launch in January 2018, Open Banking has introduced a set of open, regulated standards which enable bank customers to allow authorised third parties to access their account data and make payments. This replaced the less sophisticated, less secure ‘screen scraping’ method previously used to capture account data and established additional regulatory technical standards to secure transactions and authorisation requirements for third parties offering Open Banking services.

The implementation of Open Banking in the UK was overseen by the Open Banking Implementation Entity (OBIE). The OBIE was established by the UK Competition & Markets Authority to address the dominance of the largest UK banks (known as the CMA9). The OBIE has created open standards which also satisfy the EU regulatory requirements imposed by the EU’s second payment services directive (PSD2). This means the OBIE standards are now commonly adopted by many other banks outside the CMA9 and provide a managed ecosystem for banks and authorised third parties to securely share customer account data and make payments.

Open Banking is facilitated by two secure application programming interface (API) tools: (1) a read API which enables the authorised third party to obtain the account information, including its balance and transactions information together with key account features such as interest rates and charges (known as account information services or AIS); and (2) a payments API which enables the authorised third party to initiate payments on the customer’s behalf, with the customer’s consent (known as payment initiation services or PIS).

The challenge for payments

Open Banking in the UK has reached a number of major milestones (including over 7 million users by 2023). It is now used by a broad range of 80+ banks far beyond the CMA9 and there are over 162 live AIS providers and PIS providers in the ecosystem.

However, the rationale for Open Banking – to promote competition, innovation and increase consumer protection – has had to face a number of challenges. In the Payments space in particular, the network effect of existing card scheme-based payments presents a challenge to new entrants penetrating the market. The payment journey remains complex and differences in cross-border non-technical standards such as AML/KYC requirements makes life difficult for those looking to leverage Open Banking internationally.

The complexity of rolling out the Open Banking APIs and incremental increases in functionality over time have meant delays in bringing new products to market and challenges with technical implementation. This has presented particular issues for secure PIS-driven payment solutions, which require collaboration and co-ordination between multiple parties between customer and retailer.

On the consumer side, regular headlines about data breaches and scams have created an environment where customers have been (rightly!) warned to be careful who to trust with their data. Even though Open Banking offers a high level of technical security, more effort is required to persuade a critical mass of users to adopt it.

The Joint Statement

Last Spring, HM Treasury, the CMA, FCA and PSR announced the creation of a new Joint Regulatory Oversight Committee (Committee) to help develop the future vision of Open Banking and make recommendations on the design of the future Open Banking entity. This is part of the process of creating a “future Open Banking entity” as a successor to the OBIE as it reaches completion of its original CMA-driven implementation mandate.

The Committee’s vision is to realise the full benefits of Open Banking to promote competition and product innovation that benefits consumers, businesses and the wider UK economy. To fulfil this vision, the Committee has identified three key priorities:

  1. Unlocking the potential of Open Banking to accelerate the next generation of payments;
  2. Creating a model that can be scaled for future data sharing propositions (Open Finance);


  3. Ensuring the Open Banking ecosystem continues to develop sustainably.

The future Open Banking entity will play a key role in supporting the Committee in achieving these priorities by providing and maintaining the technical infrastructure for Open Banking, developing new technical standards, and promoting collaboration across key market participants.  

What comes next?

The Committee is currently fleshing out its roadmap for the structure, governance and funding of the new Open Banking entity, both now and within the context of the longer-term regulatory framework being developed for Open Banking. The Committee’s recommendations for the roadmap are expected to be published in the coming weeks.

As identified in the Committee’s first priority, a strong focus on payments will be central to delivering solutions that benefit customers and enable participants to leverage the full benefits of Open Banking, including monetising services. This focus is closely linked to the second priority around Open Finance, which looks at the extension of the Open Banking platform beyond payment accounts and bank accounts, to ultimately bring into scope every aspect of customers’ financial lives.

To drive forward Open Banking payment solutions, there needs to be greater alignment of the interests of all participants (banks, PIS providers, AIS providers, merchants and customers) and the Committee can play a key role in facilitating this.

Open Banking will no doubt continue to play a part in disrupting and developing Payments within the UK financial services sector, presenting opportunities and challenges for all market participants. 

We hope and expect that the new roadmap will focus on finding solutions to secure the continuous, collaborative and competition-focussed development of Open Banking in payment services and beyond. We will continue tracking these developments with interest, as we work with our clients to launch new products and find new ways to collaborate using Open Banking. 

If you require any advice on your Open Banking initiatives, please get in touch with our specialist Payments team.

Contributor: Lauren Hemingway

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2023. Specific advice should be sought for specific cases. For more information see our terms & conditions.

Date published

30 March 2023



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