Open Banking Trends: What to Expect

Managing payments can be expensive and frustrating. High card fees, chargebacks, and slow settlements eat into profits and disrupt cash flow.

That’s where open banking comes in. This new payment technology allows businesses to accept direct bank transfers, cutting out card networks and reducing costs. As adoption grows worldwide, understanding open banking trends is essential for merchants looking to stay competitive. Here’s what you need to know.

Growing Beyond Payments

Initially, open banking focused on bank-to-bank transactions. Now, the scope is widening. Fintech firms, insurance and mortgage providers, are all tapping into open banking technology to offer better services.

For businesses, this means more personalised financial products, easier data access and seamless payment. As open banking grows, expect to see more industries and use cases in the open banking arsenal.

Pay-by-Bank Is the New Norm

Open banking pay-by-bank payments happen from account to account and reduce reliance on traditional card networks. Customers no longer need to wait long settlements – payments happen in real time.

Back in 2018, the UK saw only 320,000 pay-by-bank transactions. Fast forward to 2024, and that figure has surged to 224 million. The UK is ahead of the curve in Europe, with 13% of digitally active consumers and 18% of small businesses already using open banking. With the global market projected to reach $164.8 billion by 2032, 2025 marks a key turning point for adoption.

A major factor behind this shift is the growing influence of Millennials and Gen Z. While they may not have the highest spending power yet, they are shaping the future of e-commerce. Pay-by-bank is built for their habits – no need to enter card details, no unnecessary steps, just a fast, seamless, and secure account-to-account payment experience.

Better Open Banking with New Regulations

Instant Payment Regulation (IPR)

From 2025, euro payments in the EU are going instant. Banks and PSPs will have just 10 seconds to process transactions – anytime, day or night, across borders.

The rollout starts in January 2025, when banks must be able to receive instant payments. By October 2025, they must also send them. That’s a major shift from the old 25-second standard, pushing banks to upgrade fast.

The regulation is set to supercharge open banking. By making instant payments the norm, IPR removes one of the biggest friction points – speed – paving the way for faster, smoother bank-to-bank transactions.

Experts predict that combining instant payments with open banking will drive adoption, making pay-by-bank a real contender against card networks. For merchants, this means lower costs, fewer chargebacks, and real-time cash flow, making open banking a smarter, more efficient choice.

PSD3 (2026)

PSD3 is set to fix the biggest pain points of early open banking. Banks will be required to provide faster, more reliable APIs, ensuring seamless performance. They’ll also need to publish API performance reports and remove outdated restrictions that previously slowed adoption.

With instant payments becoming the new standard and PSD3 strengthening open banking infrastructure, 2025 marks a major shift. Businesses that embrace these changes early will gain a faster, cheaper, and more efficient way to handle payments – staying ahead of the competition.

Variable Recurring Payments

Pay-by-bank is now ready for subscriptions. Traditionally, it required users to approve every transaction, making it impractical for recurring payments. But Variable Recurring Payments (VRPs) change that. Customers authenticate once, set limits, and payments happen automatically—just like direct debits or card subscriptions, but with more control.

Major banks like NatWest and HSBC are already rolling out VRPs, and UK regulators are pushing adoption. This removes a key barrier for pay-by-bank to replace traditional payments. Businesses that adopt now will get ahead of the curve.

Open Finance: Next Step

Open banking is paving the way for open finance. This broader concept includes not just banking data but also insurance, pensions, and investment accounts.

For businesses, this expansion means access to richer financial data, enabling better risk assessment and smarter financial products. Consumers will benefit from a more connected financial ecosystem, making money management easier.

Conclusion

Open banking is changing the way we pay and manage finances. The latest trends show a move toward faster, safer, and more user-friendly banking. Businesses that adapt early will stay ahead, while customers benefit from more control and better experiences.

With new regulations and tech improvements, open banking will keep evolving. Staying updated will help businesses and consumers take full advantage of its benefits.