Leading the way with Open Banking

How secure data sharing is developing the UK economy, and where innovation might take us.

A little over ten years ago, the Competition and Markets Authority (CMA) advised the UK government that the banking and financial services sectors were in need of greater competitive balance. Among the remedies for this was a push to create and promote Open Banking (OB), a system whereby secure data can be shared between banks and other bodies through linking tools called APIs.

“Initially, open banking was implemented following a competitions audit by the nine biggest banks, the CMA9, by Competition Market Authority. That was initiated for many reasons, but one of the big drivers was to encourage innovation into the market,” explains Helen Child, CEO of Open Banking Excellence (OBE), a body set up to bring together innovators in the OB space.

Embedded systems

Fast forward a decade and a half, and much of the intended progress has been made, with the UK now a leading fintech centre. On the back of that, in 2025 Open Banking is already embedded into the UK’s financial ecosystem, through the banking system, payments and so on. People and businesses in the UK are increasingly making use of Open Banking to make payments by bank transfer, with 11 million current users of Open Banking services in the UK.

The Treasury is forging ahead with establishing Open Banking as the foundation of the UK’s payments and data-sharing landscape. At the end of last year, the Treasury published its National Payments Vision, in which it said with its significant untapped potential, “Open Banking has a vital role to play in achieving this ambition in the near-term – in particular, through unlocking account-to-account payments for e-commerce.”

The government, it went on, “Expects the regulators to ensure a strong focus on competition and choice in their work to support the development of Open Banking.”

Key facts

• A total of 1.988 billion API calls were recorded in May. 

• That’s 13.5 million users (a 2.2% increase on the month before)

• HSBC reports one open banking transaction per second

Governmental seal of approval

Regulators will be building on a solid foundation, as Open Banking’s role in the financial ecosystem has grown considerably in recent years. And, this year, a major breakthrough took place. “If you paid your self-assessment tax online this year, then you’ve already used Open Banking,” Child says. “In January 2025, for one duty type, we saw £12 billion of taxes collected in a seamless transaction.”

HMRC chose to develop an open banking service based on account-to-account transactions, where users give secure consent for a trusted third party to access that data for a given purpose, such as collection of taxes for a given time. “They initially did it to reduce card fees, which created a bottom line saving for UK PLC,” says Child.

However, beyond that, account-to-account transactions mean there is no reconciliation involved, so no funds are held in suspense, creating a more efficient system at a lower cost. And that matters: January’s tax take involved 3.6 million payments, with the largest just short of £1 million.

Following that success, HMRC has signalled that it intends to implement this system across other tax types.

Open Data infrastructure

Beyond that, the use cases for Open Banking then morph into a manifesto for creating an integrated Open Data infrastructure. “We’ve recently seen Sage really driving forward how they can introduce standards to make it easier for accountants and small businesses, to report on their emissions and that would be not necessarily through open banking but through open data,” Child says.

“So if we widen the scope, that open access with secure consent gets really exciting. The Data, Use and Access Act, as it now is, is driving the UK to lead in that area of data sharing. I think that’s compelling.”

Part of that might involve using the OB infrastructure to encourage more secure and real-time data sharing. For instance, a recent project at Companies House focused on developing APIs that would allow real-time data sharing by companies to give more up-to-date information to users.

Technological adoption

Then there are the banks themselves. NatWest, for instance, has developed its own accountancy software, Free Agent, which uses Open Banking, and, along with other banks, is working closely with a range of fintechs to develop more sophisticated APIs and use cases.

“NatWest also has one on sustainability, Kogo. Then you look at who HSBC has its key relationships with, it’s everything from digital identity to accountancy software to sustainability to credit checking,” says Child, pointing to recent developments at Experian.

“No longer am I giving you access for Experian to look at my ability to pay for a loan. That’s historical. Now it’s about my real-time ability to pay forward, which is a more accurate measure of my financial position.”

Meanwhile, the accounting software providers continue to use the OB infrastructure to develop more services. For instance, QuickBooks is looking at offering 90‑day forecasts driven by live bank data, while the Tide and Sage integration bundles banking and accounting services together for a more seamless experience.

Despite all this, there does remain some reluctance to fully adopt OB, partly due to risk aversion or lack of knowledge. But Child says 2025 should be a pivotal year for that. “If you’re an accountant, you’re already using it. It’s secure – HMRC backs it.”

If you’re using QuickBooks, Zero Tide, Sage, you’re using Open Banking. “So my message would be: engage with your software suppliers and learn how you can get more. And look at the efficiencies the government are getting: you can have a slice of that cake. Speak to your accountancy software suppliers and ask them how you can get involved.”

Christian Doherty is a business journalist and freelance writer for AAT.