A decisive shift is underway across the European and United Kingdom financial landscape, moving beyond the initial adoption phase of new payment technologies into a period of accelerated commercialization and strategic expansion. Following a year of foundational progress in 2025, which saw Open Banking gain significant traction and new regulations take hold, the industry is now poised for a transformative leap. The prevailing sentiment is no longer one of mere compliance but of an urgent need to unlock the full economic potential of these innovations. The focus has pivoted toward realizing the commercial promise of groundbreaking tools like variable recurring payments (VRP) and strategically applying the hard-won lessons from Open Banking to the much broader canvas of Smart Data initiatives. This year is not about incremental adjustments; it is set to be a period of substantive innovation, profound market maturation, and the critical navigation of complex new challenges in data utilization and payment security, fundamentally reshaping how consumers and businesses interact with their finances.
The Maturation and Consolidation of UK Open Banking
In the United Kingdom, Open Banking has successfully graduated from a regulatory mandate into a formidable, market-driven force. As the initiative marks its eighth anniversary, its value is no longer a theoretical projection but a tangible reality, demonstrated by remarkable user adoption rates. Data from Open Banking Limited (OBL) revealed that by the middle of last year, a striking 15.16 million consumers and businesses were actively utilizing services powered by Open Banking, a figure that translates to nearly one in every three adults in the UK. This widespread acceptance validates the assertion by Henk van Hulle, CEO of OBL, that the narrative has fundamentally pivoted from compliance to genuine momentum. He underscores that OBL’s established trust framework now forms the indispensable backbone of a vibrant retail banking ecosystem. The organization’s priority remains the continuous refinement of standards, ensuring responsible scaling, and empowering consumers with greater choice, thereby making a significant contribution to the nation’s economic vitality and competitive edge in the global financial technology sector.
Payments have unequivocally served as the primary application and the most potent driver of Open Banking’s adoption, a trend that is widely expected to continue its upward trajectory and intensify. Melanie Lazarus, the ecosystem engagement director at OBL, projects that based on the substantial growth observed last year, Open Banking will press forward “towards mainstream usage,” with payment innovations setting the pace for the introduction of new applications and services. Running parallel to this growth is a defining trend of market consolidation. Marie Walker, an open futurist at Raidiam, observed that the eight-year milestone has been marked by “notable consolidation as players jostle for scale and strategic position.” This trend was brought into sharp focus by several high-profile acquisitions in 2025. The announcement that European Pay by Bank network TrueLayer would acquire its Nordic rival Zimpler highlighted a strategic maneuver to achieve both geographical and technological dominance. Similarly, the acquisition of bank payment specialist GoCardless by the European financial services provider Mollie further underscored the industry’s push toward creating scaled, fully integrated payment platforms that can effectively challenge legacy systems.
Commercial VRP a Watershed Moment for UK Payments
Perhaps the single most anticipated development for the United Kingdom’s payments sector is the full-scale launch of commercial variable recurring payments (VRP), an event broadly characterized by industry experts as a “watershed moment.” This pivotal breakthrough is the direct result of extensive and dedicated industry collaboration throughout 2025, which was formalized through the establishment of the UK Payments Initiative (UKPI). Sanctioned by the Financial Conduct Authority (FCA), the UKPI operates as a dynamic consortium of 31 leading Open Banking and payments organizations, including influential firms such as GoCardless, TrueLayer, Plaid, Mastercard, NatWest Group, and Moneyhub. These members have collectively committed to both funding and operationalizing the comprehensive framework required for commercial VRPs to function effectively and securely. This collaborative effort represents a significant step forward in moving Open Banking’s impact far beyond its initial, compliance-driven phase and into a new era of profound, real-world economic benefit for the entire nation.
The launch of this initiative is expected to facilitate, in the words of Raidiam’s Marie Walker, “the first live variable recurring payment transactions at scale in Q1 2026,” a development that promises to unlock “an entirely new payment paradigm for consumers and businesses alike.” This will not be an overnight flood of transactions but a carefully managed rollout. Tom Burton of GoCardless anticipates that VRP transactions will “emerge slowly at first, before building momentum throughout the rest of the year.” This measured approach will allow the ecosystem to methodically refine its processes, address any unforeseen challenges, and crucially, build consumer and merchant trust in this novel and powerful payment method. For OBL’s Melanie Lazarus, the successful launch of the UK’s first commercial VRP scheme stands as a “huge milestone.” More importantly, it serves as a powerful demonstration that when the diverse players within the financial ecosystem collaborate effectively toward a common goal, they can achieve truly groundbreaking results—a cooperative spirit she is keen to foster in the months ahead to tackle the next set of challenges and opportunities.
The Strategic Horizon Smart Data and the Broader Data Economy
While Open Banking continues to mature and solidify its place in the financial mainstream, the United Kingdom is strategically preparing for its next major evolutionary step: the creation of a comprehensive Smart Data economy. The legislative groundwork for this ambitious vision was laid with the passage of the Data Use and Access Bill in 2025, which received Royal Assent and now provides the essential legal foundation for extending the principles of secure, consent-driven data sharing beyond banking. The government’s ambition is to apply this successful model to other critical sectors of the economy, including transport and energy. The projections are substantial, with these new schemes expected to generate an estimated £10 billion for the UK economy over the next decade. To oversee this expansion, the non-statutory Smart Data Council was established to advise the government and accelerate the development of what is planned to be 20 or more distinct Smart Data schemes by the year 2035, creating a sophisticated and interconnected data ecosystem.
Progress on this front is already visible. The Department for Energy Security and Net Zero launched a call for evidence that revealed strong stakeholder support, with 76% in favor of an energy-focused Smart Data scheme. In parallel, the Department for Science, Innovation and Technology has been actively exploring how these principles can be applied to digital markets. Marie Walker, a member of the Smart Data Council, characterizes this year as “a pivotal inflection point” for this emerging data economy. She clarifies, however, that the year will not be defined by large-scale public launches but rather by the crucial and intricate foundational work centered on “exploration, collaboration, and recommendations.” The primary focus will be on the complex task of shaping the technical, regulatory, and architectural frameworks that will underpin future deployments. Critical agendas, including the challenge of ensuring interoperability across different sectors, developing secure machine-to-machine consent frameworks, and establishing robust trust layers for agentic AI interactions, are now transitioning from theoretical discussions into concrete implementation requirements for the ecosystem to solve.
Harnessing Open Finance and Embracing the Data Opportunity
Despite the significant excitement and strategic investment surrounding the broader Smart Data initiatives, a strong consensus persists within the industry that a vast reservoir of untapped potential still exists within Open Finance itself. Sectors such as pensions, mortgages, and investments remain largely underdeveloped, representing a significant opportunity for innovation. A key concern is that both the UK and Europe may be at risk of falling behind more agile and fast-moving regions. A notable example is Brazil, which has already successfully implemented a nationwide Open Insurance framework, demonstrating a more rapid pace of expansion. Lauren Jones, the Open Banking lead at Paylume, argues that with new legislative frameworks taking shape—including the European Union’s agreement on PSD3 and the Payment Services Regulation (PSR), alongside the UK’s established structures—the time has come for financial institutions to enact a fundamental shift in their corporate mindset. She urges banks to move beyond viewing these regulations as a mere “box-ticking exercise,” which has often been the prevailing attitude in Europe, and instead to recognize them as a profound “strategic opportunity.”
The European Union has itself acknowledged that the development of Open Finance solutions has proceeded at a slower pace than anticipated, attributing this lag to the “absence of clear rules of the game.” This is a critical gap that the new framework for Financial Data Access (FiDA) is specifically designed to close. Jones contends that as the entire ecosystem moves toward the implementation of FiDA, banks must undergo a critical evolution, transforming from being mere data providers into becoming active “data consumers.” This strategic pivot would empower them to participate fully in the burgeoning data economy, leveraging their established, trusted market positions to create entirely new revenue models and unlock access to enhanced, richer data sets. The benefits of such a shift would extend directly to consumers, who would gain access to superior credit scoring models, more deeply personalized financial guidance, and a new generation of customized products. As Jones aptly concludes, “Regulation is the baseline, not the conclusion,” positioning this year as the moment for a greater number of financial institutions to fully “embrace the data opportunity” and lead the next wave of financial innovation.
The Double Edged Sword Instant Payments and the Escalating Threat of Fraud
A global movement toward real-time payments has now reached a critical mass, fundamentally altering expectations for transaction speed and efficiency. As Barry Rodrigues, an executive at Finastra, observed, over 80 countries have now successfully deployed instant payment schemes. Current estimates suggest that by 2028, a full one-quarter of all global payments will be conducted in real-time. The advantages for customers are undeniable, offering faster and more affordable transactions. For businesses, the benefits include dramatically enhanced cash flow visibility and far more effective liquidity management. In Europe, the Instant Payments Regulation, which officially took effect in October 2025, has made “instant the default, rather than a premium,” according to Kjeld Herreman of Paylume, cementing its place as the new standard for the region. This paradigm shift, however, brought with it a severe and rapidly growing downside: instant payments have inadvertently facilitated instant fraud, a stark reality that will dominate the security agenda.
This escalating threat required an immediate and robust industry response. While Verification of Payee (VoP) was widely adopted across Europe as a primary countermeasure, its implementation for corporate payments, which are often exempt from strong customer authentication, remained a significant challenge. The sheer scale of the problem became clear when a joint report from the European Central Bank and the European Banking Authority revealed that the total value of fraud in the European Economic Area had risen to €4.2 billion in 2024. In response, the industry prepared for a massive escalation in security investment, with one study forecasting that spending on fraud detection and prevention would jump from $21 billion in 2025 to $39 billion by 2030. The situation was further complicated by the removal of the €100,000 limit on instant payments, which created a “perfect breeding ground for fraudsters to devise new attack vectors.” Compounding this risk, the Payment Services Regulation (PSR) shifted liability for fraudulent payments away from consumers and onto payment service providers, compelling banks to massively uplift their fraud prevention capabilities. The most promising path forward involved greater collaboration, where the exploration of secure, API-driven fraud-related data sharing among banks became essential to developing a collective and effective defense.
