Understanding UK Open Banking and EU Frameworks [2025 Guide]

UK open banking payments have surged by 215% in just twelve months. Since January 2018, the UK has led open banking implementation, with Europe typically 6-12 months behind in adoption. This timing gap has created significant practical differences in how financial services operate across both markets.

As of December 2024, the UK recorded 12.09 million active open banking users, with 223.9 million payments made using open banking in 2024, a 72% increase compared to 2023. This adoption stems from two key foundations: the Payment Services Regulations and a single common API standard. Europe has chosen a different path, operating without a unified pan-European API standard and instead relying on regional frameworks including STET and the Berlin Group’s NextGen PSD2.

These distinctions create real-world impact beyond technical specifications:

• User experience varies dramatically between regions
• Adoption rates show measurable differences
• Market opportunities follow different patterns
• Implementation success varies significantly

The UK’s uniform approach, mandated specifically for the nine largest banks (CMA9), delivers consistent terminology and reliable user flows. This standardisation simply works better in practice than Europe’s fragmented implementation.

Whether you manage a fintech business, work within a financial institution, or simply use banking services, understanding these regional differences helps you make informed decisions about open banking services and their practical capabilities.

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1. Regulatory Foundations: PSD2 vs UK Open Banking Standards

The UK and Europe have built open banking on different regulatory foundations, creating two distinct systems with varying levels of standardisation and implementation success.

Legal Mandates: PSD2 Directive vs UK Payment Services Regulations

PSD2 (Second Payment Services Directive) created the legal framework for European open banking, coming into force in January 2016. The UK implemented this through Payment Services Regulations 2017 (UK PSRs), with the Financial Conduct Authority (FCA) serving as the competent authority. After Brexit, the UK maintained these regulations with necessary amendments to ensure they functioned outside the EU. The Competition and Markets Authority (CMA) investigation into retail banking competition provided additional UK-specific foundations, focusing specifically on improving competition among larger banks.

📚 Detailed Guide to PSD3

Scope of Regulation: EU-wide Flexibility vs UK CMA9 Mandate

The most significant regulatory difference appears in scope and specificity:

Aspect	UK Approach	EU Approach
Scope of Mandate	Mandated for nine largest banks (CMA9) only	Applies to all payment account providers regardless of size
Standards Body	Open Banking Implementation Entity (OBIE) enforces uniform API standards	PSD2 requires banks to create APIs but leaves technical specifications open
API Standardisation	Single, mandatory technical standard	No single pan-European API standard
Implementation Approach	Centralised implementation approach	Flexible implementation across member states

While Europe lacks a unified standard, approximately 75% of EU banks have now adopted the Berlin Group’s NextGen PSD2 standard as their implementation framework.

Implementation Timelines: 2018 UK Launch vs 2019 EU Rollout

The UK gained a significant head start:

• January 2018: UK launch of open banking coinciding with the PSD2 effective date
• Version 1 of the Open Banking Standard is immediately available to third-party providers
• September 2018: Version 3 released, enabling full PSD2 compliance

European implementation followed a different schedule:

• 18-month transition period after the PSD2 effective date
• 2019: Practical rollout date for most European implementations
• 2021: European API reliability and stability began catching up to UK levels

Why this matters for financial services

The regulatory differences created two distinct implementation paths. UK banks followed a single, clear roadmap with one technical standard. European banks faced greater flexibility but also more uncertainty, with multiple regional standards emerging across the market.

These regulatory foundations directly impact API quality, user experience, and adoption rates. The UK’s early, standardised approach helped establish clearer benchmarks for success, while Europe’s implementation continues catching up to these standards.

2. User Experience and Market Adoption

The real-world impact of different open banking approaches becomes clearest when examining user experience and adoption figures. UK and EU strategies produce noticeably different results in everyday use.

Authentication Methods: Two Fundamentally Different Approaches

Authentication sits at the heart of the user experience divide:

UK approach:

• App-to-app redirection mandated by the Open Banking Implementation Entity
• Users move seamlessly between third-party and banking apps via mobile OS
• Consistent terminology and predictable flows reduce friction
• Single authentication flow creates predictable user patterns

European approach:

• Typically decoupled authentication requiring mobile PINs or one-time passwords
• Web redirect forces users through multiple browser screens
• Manual return to original app creates broken user journeys
• Some European banks implement up to 17 authentication steps taking four minutes to complete a single connection

Payment Success: UK Shows Higher Conversion Rates

These authentication differences directly impact success metrics:

• Open banking payments achieve 97% authorisation rate versus traditional card payments at just 70%
• UK payment adoption reached 14.5 million transactions in January 2024
• This represents 69% year-on-year growth
• Payment usage overtook data connections for the first time in August 2023

Real-Time Payments: Speed and Availability Gaps

The underlying payment infrastructure creates another key difference:

UK system:

• Faster Payments enables near-instant transfers
• Transaction limits reach up to £1,000,000
• Universal availability across UK banks

European system:

• SEPA Instant remains optional for banks
• From 9 January 2025, EU banks and payment companies are mandated to comply with the SEPA Instant Credit Transfer (SCT Inst) scheme, ensuring euro-denominated instant payments are processed within 10 seconds.
• Coverage varies dramatically by country, from 100% in Slovenia to just 3% in Denmark

📚 Understanding SPAA in a Nutshell

3. Market Growth: Consumer and Business Adoption

User adoption statistics highlight the gap between approaches:

• By January 2024, one in seven (13%) digitally active UK consumers were using open banking
• Small business adoption reached even higher at 18%
• UK’s open banking fintech ecosystem now valued at over £4.4 billion
• UK firms raised more than £1 billion over three years

Nevertheless, consumer education remains challenging; 48% of consumers globally still claim they’re “scared” of open banking.

Why this matters for businesses

The authentication approach directly affects conversion rates. Businesses operating across both markets need to account for these differences when designing customer journeys or forecasting payment success rates.

4. Operational Maturity and Future Outlook

UK and European open banking systems show significant differences in their operational readiness and future development plans. These gaps directly impact how businesses can use these services today and what they should prepare for tomorrow.

API Reliability: Performance Metrics Tell the Story

The UK’s CMA9 banks have steadily improved their API reliability and speed, narrowing the performance gap with digital challengers. Standout performance comes from neobanks:

• Monzo and Tide maintain near-perfect uptime records
• Their performance gains have recently plateaued
• Infrastructure choice matters significantly for reliability

Cloud provider selection directly impacts service quality. AWS and IBM environments deliver the fastest hosting with p99 latencies below 600 milliseconds. Microsoft Azure lags behind, with DNS lookup times increasing by 80% compared to 2022 levels.

The EU has made solid progress. API stability began catching up to UK standards in 2021, with the current maturity gap standing at approximately 6-12 months, much narrower than previous years.

Variable Recurring Payments: UK Implementation vs EU Planning

The UK leads with Variable Recurring Payments (VRPs), allowing customers to authorise payment providers to make recurring payments within set parameters. The CMA required all nine major UK banks to implement VRP APIs specifically for “sweeping” – the automatic movement of funds between a customer’s own accounts.

Further development followed in March 2022 when the CMA clarified the sweeping definition to enable delivery later that year.

Europe remains several steps behind. The EU is expected to learn from UK experiences, with most European countries unlikely to implement VRPs before 2025. To bridge this gap, some European providers have created hybrid solutions combining open banking payments with SEPA direct debits.

Open Finance: Expanding Beyond Basic Banking Data

Looking ahead, both regions plan to extend open banking principles to wider financial services:

UK Roadmap

• 2024: CMA confirmed full completion of Open Banking Roadmap
• Within 12 months: FCA committed to publishing Open Finance roadmap
• The FCA expects the regulatory foundations for the first Open Finance scheme to be in place by the end of 2027, with a roadmap for rollout to be published within a year.
• Priority focus: Small business lending to improve capital access

EU Strategy

• Proposed regulations: Payment Services Regulation (PSR) and Financial Data Access regulation (FIDA)
• Expanded scope: FIDA would enable sharing broader data beyond payment accounts, including credit institutions, investment firms, and insurance companies
• As of April 2025, the Financial Data Access (FIDA) regulation is under review by the European Parliament and the Council of the European Union, with adoption expected in 2025 and transitional periods planned for implementation.

Key points to remember:

• The UK maintains a 6-12 month implementation lead in most open banking features
• VRPs represent the next major functionality difference between markets
• Both regions aim to expand beyond basic banking data, but with different timelines
• Small businesses may benefit first from UK Open Finance initiatives

5. How Finexer Provides Open Banking API Access

Finexer offers a secure, FCA-authorised Open Banking API designed specifically for UK-based businesses. Built to meet the requirements of the UK’s Payment Services Regulations and aligned with OBIE standards, Finexer enables direct connectivity to 99% of UK banks.

With Finexer, businesses can:

• Access Real-Time Bank Data
  Pull transaction and balance data in real-time to power reconciliation, forecasting, and client onboarding workflows.
• Initiate Payments via UK Faster Payments
  Set up secure, account-to-account payments with real-time settlement using our payment initiation API.
• Use Developer-Friendly Tools
  Finexer’s RESTful API, webhooks, sandbox environment, and prebuilt SDKs make integration simple, even without a large engineering team.
• Remain Fully Compliant
  As an FCA-authorised provider, Finexer ensures all data sharing and payments comply with UK Open Banking regulations.

Finexer’s infrastructure is ideal for fintechs, accounting platforms, and payment providers who want fast, reliable access to Open Banking in the UK, without the complexity of managing bank-by-bank integrations.

6. Comparison Table: UK vs EU at a Glance

The table below summarises key differences between UK Open Banking and EU standards across major implementation aspects. This side-by-side view highlights where approaches diverge most significantly.

Aspect	UK Open Banking	EU Standards
Regulatory Framework	Payment Services Regulations 2017; CMA9 mandate	PSD2 Directive; Applies to all payment account providers
Launch Timeline	January 2018	2019 (with 18-month transition)
API Standardisation	Single uniform standard enforced by OBIE	Multiple standards (Berlin Group, STET, Polish API)
API Adoption	Mandatory for CMA9 banks	75% of EU banks use Berlin Group standard
Authentication Method	App-to-app redirection	Web redirect, mobile PINs, OTP
Payment Success Rate	97% authorisation rate	Not mentioned
Real-time Payments	Faster Payments with £1,000,000 limit	SEPA Instant (optional, 10.38% adoption)
Consumer Adoption	13% of digitally active consumers	Not mentioned
API Maturity	Leading implementation	6–12 months behind UK
Variable Recurring Payments	Implemented for sweeping	Expected implementation by 2025
Future Development	Open Finance roadmap by FCA, implementation by 2027	FIDA and PSR regulations under negotiation until 2025

Key points to remember:

• The UK enforces a single standard, while the EU permits multiple approaches
• Authentication methods differ substantially, affecting user experience
• UK real-time payments offer higher limits and wider adoption than SEPA Instant
• The API maturity gap has narrowed to 6-12 months between markets
• Both regions are expanding beyond basic open banking toward broader financial data sharing