Open Banking is usually filed under disappointment, a good idea that never quite scaled. The usage figures say something else. By June 2026 Open Banking Limited counted more than 19 million active user connections and more than 40 million open banking payments a month, and over the whole of 2025 payment volumes reached 351 million, up 57 per cent on the year. That is not a plateau. What plateaued was the business case for the banks that were ordered to build the rails in the first place. The government now wants to extend that same model across the economy, and the interesting question is whether it has fixed the thing that actually went wrong.
Open Banking exists because the Competition and Markets Authority told it to. Its 2017 retail banking order required the nine largest current-account providers, the group known as the CMA9, to build and fund a common set of open interfaces so that authorised third parties could read account data and initiate payments on a customer’s instruction. The aim was competition: let challengers and fintechs plug into incumbent banks and win customers on service. It worked on its own terms. There are now around 145 third-party providers live in the market, and open banking payments run at roughly one in every thirteen Faster Payments.
The plateau was never in the usage
The problem was who paid. The CMA9 built a piece of shared national infrastructure on their own balance sheets and were given no way to charge for access to it. Every marginal improvement, every new interface, every uplift in reliability was a cost with no revenue attached, so banks had little reason to invest beyond the mandated minimum. The most commercially promising feature, variable recurring payments, shows the strain. Sweeping VRPs, which move a customer’s money between their own accounts, are mandated and free, and their volumes nearly doubled over the year to account for around 13 per cent of open banking payments. The non-sweeping, commercial VRPs that could actually replace card payments at the checkout have crawled, because there was no agreed framework to price them. The Joint Regulatory Oversight Committee, run by the Financial Conduct Authority and the Payment Systems Regulator, spent years trying to design a commercial model and a long-term operator to succeed the CMA’s temporary arrangements. Open Banking scaled in spite of its economics, not because of them.
What Smart Data actually changes
This is the backdrop to the Data (Use and Access) Act 2025, which received Royal Assent on 19 June 2025. Part 1 of the Act gives the Secretary of State and the Treasury the power, by secondary regulation, to establish Smart Data schemes: to designate the data holders in a sector, and to compel them to share customer data and business data with the customer or with authorised third parties. In finance, the Treasury can empower the FCA to write and enforce the scheme rules. Crucially, the Act does more than repeat the Open Banking compulsion. It provides for scheme operators, for standards bodies, and for the funding of a scheme, including the power to charge fees and levies. In other words it supplies the commercial and governance scaffolding that the CMA order never had. That is the whole bet: mandated participation, but this time with an economic framework attached.
The government set out where it wants to take this in its Smart Data 2035 strategy, published on 2 April 2026. It names ten candidate sectors, from banking and finance to energy, property, telecoms, transport and retail, and targets five or more live schemes by 2030 and twenty or more by 2035, backed by around 36 million pounds of public investment. The four it is pushing hardest, banking, finance, energy and property, are the ones the government reckons could add 9.6 billion pounds a year to output by 2043. For finance, the roadmap points to Open Finance, extending data sharing beyond current accounts into savings, mortgages, pensions and consumer credit. Consultations in banking, energy and property are expected across 2026, with the first regulations likely in 2027 and 2028. Open Finance, in short, is not arriving on its own; it is one lane of a wider Smart Data build-out, and it will be legislated the same way the others are.
What a bank has to do differently
For a bank, this is not a rerun of the free-API compliance project. Three decisions follow. The first is scope: sharing will reach products that have never been exposed through an interface before, from savings and mortgage data to pension and credit information, each with its own consent, liability and data-quality questions. The second is the scheme itself: rather than a regulator-imposed minimum, a bank will sit inside a designated scheme with an operator, agreed standards and, potentially, fees and levies to fund it. The third is strategic: whether to treat Smart Data as a cost of doing business, opening data because the law says so, or as a two-way opportunity, becoming a data user that builds savings, lending and advice propositions on top of rivals’ data as well as its own.
That third choice is where the economics finally bite. If the secondary regulations give banks a genuine commercial return, through paid premium interfaces or cost recovery, the rails become an asset worth investing in rather than a compliance line item. If they do not, banks will do the minimum again, and Open Finance will inherit Open Banking’s central weakness at a larger scale. The legal power to compel data sharing is now settled. Whether the compulsion produces more than a tick-box exercise depends on the detail of rules that have not yet been written, and the 2026 consultations are where we will find out whether the Treasury has learned from the rails it built the first time.
Sources: Data (Use and Access) Act 2025, Royal Assent 19 June 2025, Part 1 framework empowering the Secretary of State and HM Treasury to establish Smart Data schemes by regulation, designate data holders, and provide for scheme operators, standards and funding, with the Treasury able to empower the FCA to make and enforce financial-sector scheme rules; the government’s Smart Data 2035 strategy, published 2 April 2026, naming ten candidate sectors, a target of five or more live schemes by 2030 and twenty or more by 2035, around 36 million pounds of backing, and an estimated 9.6 billion pounds a year of output by 2043 from the priority banking, finance, energy and property schemes; Open Banking Limited figures for June 2026 of more than 19 million active user connections and more than 40 million monthly open banking payments, and 2025 full-year payment volumes of 351 million, up 57 per cent, with sweeping variable recurring payments near 13 per cent of the total and around 145 live third-party providers; the Competition and Markets Authority’s 2017 retail banking market investigation order requiring the CMA9 to build and fund open banking interfaces; and the Joint Regulatory Oversight Committee, run by the FCA and the Payment Systems Regulator, on the commercial variable recurring payments framework and the long-term operator for open banking.
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