UK financial services is undergoing a significant transformation, driven by a series of strategic regulatory updates enabling the development of open banking. These changes are designed to move the ecosystem beyond its initial mandated phase and into a future where innovation and industry leadership take centre stage.

Last week, the Financial Conduct Authority (FCA) announced the creation of the Future Entity — a new, permanent body that will replace Open Banking Limited (OBL). Set to support innovation across both payments and data, the Future Entity marks a pivotal step in the evolution of Open Banking. It will build on the foundations laid by the initial CMA order and support broader ambitions under the National Payments Vision (NPV) — the government’s strategy to modernise the UK’s payments infrastructure and promote open banking as a competitive, mainstream alternative.

UK open banking’s journey so far

This next phase builds on the work of the Joint Regulatory Oversight Committee (JROC), a collaboration between the FCA, Payment Systems Regulator, Competition and Markets Authority, and HM Treasury, which concluded that a long-term governance and delivery framework was needed to unlock the full potential of open banking. That potential goes beyond payments. Account Information Services (AIS) are maturing rapidly, laying the groundwork for broader, integrated data services aligned with the Data Use and Access Act (DUAA). Together, these developments are steering the UK towards a future Open Finance ecosystem — one that’s built on both seamless payments and smart data sharing.

The Future Entity will be central to making this vision real. It’s been tasked with supporting industry-led initiatives like commercial Variable Recurring Payments (cVRP), which are key to unlocking use cases such as e-commerce. By improving user experience and delivering reliable, scalable alternatives to traditional card payments, these innovations will help drive mass adoption.

What will the Future Entity do?

The Future Entity, which will be entirely funded by industry, will serve as the central hub for the open banking ecosystem. With supervision from the FCA, it will take on crucial roles, including:

• Setting standards: The body will create and maintain common rules and technical standards to allow different financial institutions to seamlessly communicate with each other. This is key to ensuring that services are secure and reliable for everyone, and will prepare for the next wave of financial innovation.

• Commercial schemes: The Entity will work with multilateral agreement operators to enable commercial schemes. These schemes will only operate where there is no commercial incentive or market failure. This will ensure fair opportunities for the market players.

• Monitoring performance: A key part of the Entity’s role will be to proactively monitor and champion excellence across the network. By ensuring services are consistently fast and efficient, the initiative will build a new level of confidence in open banking, driving greater adoption and trust as the technology matures.

• Providing essential services: By providing directory and certification services, the Entity will ensure trust, security and interoperability across the ecosystem, making it easier and faster for new and existing companies to participate.

By consolidating these functions, the initiative aims to create a stable and predictable environment, freeing up companies to focus on innovation and product development.

Yapily’s take on the Future Entity

At Yapily, we believe the shift to a permanent, industry-led body represents a positive development for open banking. It provides the stability and clarity needed to foster innovation and is a clear sign that the industry is continuing to mature. However, there are some considerations that need to be addressed to ensure the Entity’s success.

• Fair access: The transition from the current regulatory framework raises questions about how to ensure that essential, basic services remain freely accessible to everyone. The industry must work together to make sure that access is guaranteed and that core functions don’t become tied to expensive contracts.

• Transition disruption: A crucial part of any major shift is ensuring a smooth transition. During the handover period from the legacy body to the new entity, there could be some initial confusion over roles and responsibilities. For third-party providers, this might lead to temporary increases in compliance complexity or onboarding delays as they adapt to new contracts and standards. However, by focusing on clear communication and a well-managed process, the industry can quickly move through this period.

• Preventing fragmentation: The new model must guard against the risk of different levels of coverage, UX, protections and costs. A unified approach is essential to prevent market confusion, which could hamper adoption.

Nicole Green, VP Product Strategy, Innovation and Policy at Yapily, said, ‘The FCA’s vision for Future Entity marks a pivotal step for UK Open Banking — replacing OBL with a permanent, industry-funded body to set standards, monitor performance, and underpin innovation. It’s the right move for stability, but we must apply lessons from cVRP if we want it to succeed.’ The upcoming workshops led by the Financial Conduct Authority provide a crucial opportunity for all parties to shape this future.

A clear, stable path forward for UK open banking

The government’s clear support for open banking, outlined in the NPV and Smart Data Bill, shows a commitment to transforming open banking into a competitive, mainstream alternative for payment initiation and financial data access.

The Entity provides the stability and clarity that the industry needs to thrive. It places the power and responsibility for innovation directly in the hands of those who built the technology, enabling a more collaborative environment where companies can build and scale the next generation of financial products. Ultimately, this step forward represents open banking’s continued maturity as it evolves into a more secure, efficient, and dynamic financial ecosystem for consumers and businesses.