FCA Publishes Research Note And Next Steps On Open Banking And Open Finance

Earlier this year, the FCA commissioned two consultancies to carry out research on the current state of open banking services and to inform the development of open finance.

The FCA has now issued a research note summarising the analysis. The analysis set out in the note will contribute to its wider programme of work on open banking and open finance.

Key themes of research

The key themes from the research were:

• Open banking continues to grow. It has made steady progress in the UK, establishing a foundation for innovation and competition. Growth has been driven by practical use cases and increasing consumer trust. This gradual development, mirrored in other fintech innovations such as digital wallets, suggests that open finance could follow a similar trajectory.
• Open banking offers valuable lessons for open finance. While there remain many questions about open banking, the UK's experience provides valuable insights for the development of open finance. Insights from international approaches – both successes and challenges – can further inform the UK's development of an effective and inclusive open finance framework. The early stages of open finance should be seen as a space for experimentation and refinement, with a focus on meaningful outcomes rather than short-term adoption metrics.
• There is still work to do in open banking. Open banking in the UK has established a strong foundation for innovation, inclusion, and secure digital payments, with growing potential to reshape the financial landscape. However, fragmented regulation, commercial misalignment, and uneven consumer trust present challenges that must be addressed.
• Roadmaps for both open banking and open finance can help industry investment and coordination. While both distinct, the roadmaps should be aligned to support and reflect industry leadership, investment and coordination.
• A range of considerations must inform regulatory framework design. Developing a coherent regulatory framework for open finance will require early alignment across regulators, commercially viable incentive structures, and investment in shared infrastructure. Key considerations include data reciprocity, technical readiness, systemic safeguards, and governance models that balance innovation with consumer protection and market stability. These considerations can be considered as a trade-off between the potential benefits of open finance, and the potential risks it could pose. This approach aims to make sure that the FCA and industry participants make balanced, risk-informed decisions that reflect the real-world complexity of the open banking and open finance markets, and allow the FCA to be a smarter, more adaptive regulator.

What's in the pipeline?

Looking ahead, the FCA plans the following:

• It will launch two TechSprints in autumn 2025 focused on small and medium-size enterprises (SME) finance and mortgages. They will test use cases and accelerate implementation, aiming to improve financial access and management.
• Research under the Smart Data Accelerator will assess foundational technologies like AI, blockchain and quantum computing. Findings will inform future infrastructure needs and regulatory considerations for scaling open finance.
• The FCA will explore smart data use cases beyond financial services with a view to unlocking wider consumer and business benefits. Internationally, the FCA is collaborating on Project Aperta to advance open finance interoperability, starting with trade finance and SMEs.
• It will reflect on the research findings to inform the design of the long-term regulatory framework for open banking.
• Following the Data Use and Access Act receiving Royal Assent earlier in 2025, the FCA is working with the Treasury to ensure that powers provided via secondary legislation enable effective regulation.
• As announced in the future entity (FE) Feedback Statement, workshops with industry over autumn 2025 will inform the FCA's approach to establishing a future entity, expected to become the UK's primary standard-setting body for open banking application programming interface (APIs). It expects an update by the end of 2025.
• The FCA is working with industry to introduce commercial variable recurring payment (VRP) services, which are expected to offer consumers greater flexibility and choice in how they make payments.
• The FCA will continue to engage widely with stakeholders and work closely with government to shape and publish an open finance roadmap by March 2026, to align with the UK Government's National Payments Vision and the FCA's 5-year strategy.

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