For many years, the phrase “open banking” was associated with regulation and compliance. That story is out of date now, in 2025. Now, what does open banking mean in the UK context?
Through Application Programming Interfaces (APIs), banks, financial institutions, and third-party providers can share financial data and start payments using this secure, consent-driven framework.
This framework is now a widely accepted idea rather than a niche one. There were 12.09 million active open banking users in the UK by the end of 2024, and payment volumes had increased by an astounding 72% annually. By 2025, open banking had transformed from a mandated practice to one of the most potent catalysts for financial institutions’ expansion. The five crucial use cases that your organisation needs to take advantage of in order to remain competitive are examined in this article.
How Open Banking APIs Are Transforming Banking
In 2025, the open banking API is no longer just a compliance task set by the CMA. It’s now a tool for generating revenue.
This shift is powered by the move to Open Finance, supported by the new Data (Use and Access) Act. This act expands data sharing beyond current accounts to savings, pensions, and investments, helping to create an estimated £10 billion smart data economy.
How UK banks can Reduce Risk and Cut Operational Costs
For operations and risk teams, manual processes are a bottleneck. Open banking-driven automation solves this by providing direct, verified data.
Use cases:
- Automate Affordability and Risk Checks Instead of relying only on static credit scores or asking customers for paper bank statements, Account Information Services (AIS) provide a real-time, verified picture of an applicant’s income and expenditures. For open banking loans, this means you can make faster, far more accurate lending decisions, reducing risk and manual review costs.
- Streamline KYC and Onboarding The question “is open banking safe?” is best answered by its utility in security. Because the data comes directly from a customer’s verified bank account (with their explicit consent), it can be used to instantly confirm their identity and address. This cuts onboarding time from days to minutes, dramatically reducing customer drop-off and compliance overhead.
How UK banks can Increase Revenue and Payment Efficiency
For product and payments teams, the goal is to create more value and cut processing fees. Open banking payments provide a direct alternative to legacy card rails.
UK Banks can:
- Create New Revenue with Variable Recurring Payments (VRPs) VRPs are the 2025 evolution of Direct Debits. They allow you to securely manage recurring payments for subscriptions, memberships, and utility bills where the amount might change. For banks, this is a new, low-cost payment rail that you can offer to your business customers, creating a fresh revenue stream.
- Lower Costs with Account-to-Account (A2A) Payments By facilitating direct A2A payments, you can bypass traditional card network fees. This is a powerful selling point for your merchant customers, offering them instant settlement and improved cash flow. For the bank, it reduces reliance on expensive third-party payment networks.
How UK banks can Win and Retain More Customers
For digital and innovation leads, the primary challenge is customer acquisition and retention. Open banking allows you to build the fast, seamless experiences that customers now expect.
Use cases:
- Offer Instant, Data-Driven Loans: This is where it all comes together. By using AIS data for an instant affordability check and a Payment Initiation Service (PIS) for an immediate payout, you can approve and disburse loans in a single session. This “time-to-money” is a massive competitive advantage and a powerful customer acquisition tool.
- Build “Stickier” Bank Apps: Why let a third-party app be your customer’s financial hub? By using AIS, you can build a financial dashboard directly into your own banking app. This allows customers to see all their accounts, even from rival banks, all in one place. This service builds loyalty and makes your app an indispensable part of their daily financial life.
Building vs. Buying Open Banking APIs
For a financial institution, the path to implementation involves one key question: build or buy?
- Building (Being a Regulated Provider) entails creating your own APIs, handling security, and negotiating the intricate regulatory environment. Although this route gives you complete control, it is very expensive, takes a long time to develop, and requires a lot of compliance.
- Acquiring (Single API Integration) entails collaborating with a regulated Third-Party Provider (TPP) like Finexer to leverage their pre-existing, compliant API infrastructure. This strategy lowers expenses and shortens time to market, frequently from years to weeks.
How Finexer Provides a Solution
For most institutions, building from scratch is slow, expensive, and full of regulatory hurdles. Partnering is the fastest way to get your products to market.
This is what Finexer does. We provide a single, unified open banking API platform that handles the complex infrastructure for you. Instead of spending months on compliance and development, your teams can focus on what they do best: building the solutions.
With Finexer, you can:
- Go live in days, not months: Plug directly into our platform to access the AIS and PIS data you need.
- Solve all three challenges at once:
- Cost & Risk: Instantly access verified data for affordability and KYC.
- Revenue: Launch A2A and VRP payment solutions for your customers.
- Retention: Get the tools to build all-in-one financial dashboards.
- Stay focused on your business: We manage the security, connectivity, and regulatory complexities, so you don’t have to.
If your goal is to use open banking for real growth in 2025, Finexer provides the platform to make it happen. Get in touch with our team to book a demo and leverage open banking for your growth!
Conclusion
As we’ve seen, open banking in 2025 is no longer a theoretical concept. It’s a practical tool that financial institutions are actively using to solve core business challenges in risk, revenue, and customer retention.
The key strategic decision is no longer whether to adopt but how to implement. Choosing between a lengthy in-house build or accelerating your time-to-market by partnering with a specialist open banking API provider, like Finexer, is the critical first step in turning these growth opportunities into reality.
What is open banking in simple terms?
It’s a secure way to let authorised apps and services access your bank data or make payments on your behalf, but only with your explicit consent.
Is open banking safe for banks and customers?
Yes. It uses bank-level security and strong customer authentication and is regulated by financial authorities. You are always in control of who has access.
Who controls my data in open banking?
You do. Data is only shared with your explicit permission for a specific service, and you can revoke that permission at any time.
Integrate Finexer’s Open banking API with 3-5 weeks of hands on onboarding support and no extra setup fees!