Open banking began as a shared concept on both sides of the Channel. Its objective was to force banks to open customer data to authorised third parties, and competition and innovation will follow. A decade on, the UK and EU are still recognisably related, but they are no longer travelling in the same direction. So are they aligned or diverging? The honest answer is both.
The common root
Both regimes trace back to PSD2 (2015). The UK implemented it through the Payment Services Regulations 2017, layering the CMA’s 2017 Retail Banking Market Investigation Order on top, which forced the nine largest banks (the CMA9) to build standardised APIs. The EU relied on PSD2 alone and left API standards to the market, which gave rise to competing frameworks such as the Berlin Group’s NextGenPSD2 and STET.
Brexit then turned a shared rulebook into two parallel ones. UK firms lost passporting rights, so a UK-authorised TPP that wants EU customers needs an EU licence, and vice versa. The legal text is still similar today, but the direction of travel is not.
Regulation: where the paths are splitting
The UK’s priority is no longer “does open banking work?” but “who governs and funds it long term?”
Various different elements are converging:
- Legal footing through Smart Data. The Data (Use and Access) Act 2025 creates powers to establish Smart Data schemes across sectors, with open banking as the reference case. Secondary legislation is expected to put the long-term regime on a firmer legal basis.
- Commercial VRP. Variable Recurring Payments began as “sweeping” between a person’s own accounts. The policy goal is now commercial VRP for utilities, subscriptions and retail, with a sustainable commercial model rather than a mandated free service. The UK Payments Initiative is now the commercial scheme that will take it forward.
- Regulator consolidation. The government’s decision to fold the PSR into the FCA signals a more joined-up approach to payments and data oversight, consistent with its National Payments Vision.
The EU’s answer to PSD2’s shortcomings is PSD3 and a new Payment Services Regulation (PSR), on which a provisional political agreement was reached in late 2025. The direction is more tightening and clarifying rather than reinventing:
- Better interfaces and user control. Stronger expectations on the quality of dedicated APIs, tighter rules on fallback access, and permission dashboards so customers can see and revoke consents.
- Fraud and liability. Stronger obligations around impersonation fraud, name-and-account verification (building on the Instant Payments Regulation) and information-sharing between PSPs and platforms.
- Open Finance (FiDA). The Commission’s proposed Financial Data Access framework would extend data sharing to savings, investments, pensions and insurance. It has faced strong industry pushback so is not certain to be taken forward.
There is a major contrast here. The UK is trying to build a sustainable commercial market on top of existing regulated access, while the EU is refining a compliance-driven framework and debating on how much further to extend it.
Market movements
The UK is generally seen as the more mature market for open banking payments and data use, with consistent public reporting of millions of active users and billions of API calls. That reflects the CMA9 mandate, a single standard and a single central coordinating body.
The EU has strong pockets (the Nordics, the Netherlands, Germany and Spain, with Italy and France growing) but remains fragmented across national schemes, languages and bank-by-bank API quality.
Account-to-account has become a strategic battleground. In the EU, the European Payments Initiative’s Wero wallet is replacing established national schemes such as iDEAL and Payconiq, and the digital euro sits in the background as a policy-backed alternative to card schemes. The UK has no equivalent single-brand wallet, and its A2A story is being written through Pay by Bank, VRP and the National Payments Vision. Both are trying to reduce dependence on card rails, but through different vehicles.
The sustainability question is now a central theme in both markets. Free mandated access is giving way to discussions of who pays for premium APIs. In the EU, the SEPA Payment Account Access (SPAA) scheme from the EPC is a commercial rulebook for exactly this. In the UK, the future entity and commercial VRP framework is playing the same role.
Use cases: the real convergence
For the people and businesses actually using open banking, the use cases look strikingly similar:
- Pay by bank. Lower cost than cards, faster settlement and less fraud exposure, popular in e-commerce, gaming, travel and government payments.
- Recurring and subscription payments. VRP in the UK and various mandate-like A2A solutions in the EU, both aiming to challenge direct debit and card-on-file.
- Affordability and credit decisioning. Real transaction data replacing payslips and bureau-only assessments for lenders on both sides.
- Personal finance management and business accounting. Aggregation, categorisation and automated bookkeeping.
- Onboarding, KYC and AML. Account verification, income checks and name-matching.
- Account sweeping and treasury. Moving money between a person’s or business’s own accounts, and automated pots.
Where they differ is maturity and mix. The UK is further along on VRP and public-sector payments, while the EU is stronger on regional wallets and, potentially, a pan-European open finance play if FiDA survives. One reason open banking payments has struggled in Europe is there are strong bank-led A2A solutions that do not exist in the UK, making it harder for open banking payments to cut through.
Aligned or divergent?
Both markets are aligned in some respects. This is mainly on foundational principles (customer consent, regulated TPPs, strong customer authentication), core use cases, and the underlying commercial dynamics. Both want to move beyond card-dominated payments and sustainably fund the API layer.
Where they strongly diverge is the governance model (a central UK entity under a joint regulatory committee versus a decentralised EU landscape), the regulatory instrument (UK Smart Data powers and VRP versus EU PSD3/PSR and the open finance debate), fraud policy design, and market structure (UK concentration around a single standard versus EU fragmentation with market-led schemes).
It is likely in the future that there will be convergent outcomes but divergent mechanisms. Both regions will end up with commercially sustainable open banking payments and a broader data-sharing economy, but through separate legal and governance routes.
Areas to watch
- The final text and implementation timeline of PSD3/PSR, especially its fraud liability provisions.
- Whether FiDA is revived, narrowed or shelved.
- UK secondary legislation under the Data (Use and Access) Act and the successor to Open Banking Limited.
- Take-up of commercial VRP beyond sweeping.
- Whether Wero and the digital euro change the economics of A2A payments in Europe.
