The UK, which launched open banking in 2018, is seeing its fintech sector struggle to make open banking-powered payments a viable alternative to card payments
Akila Quinio / Financial Times :
Context & Ripple Effects
The UK’s open-banking regime began with rules requiring banks to share customer-requested account information with third parties, creating the access layer on which payment products could be built. That early mandated bank-data sharing framework is now being tested on whether it can support a mainstream checkout alternative, not just fintech connectivity.
The difficulty also lands amid broader pressure on the UK fintech ecosystem, after concerns over London’s weakening fintech position and as leading UK fintechs seek growth beyond their home market.
First-order effects
- UK fintechs building account-to-account payment products face a harder path to turning open-banking access into a commercially viable replacement for card payments.
- Card payments retain their position as the established payment option while the proposed alternative struggles to gain viable use.
Second-order effects
- Merchants and payment providers have less immediate reason to change checkout flows or payment acceptance around open-banking payments when cards remain the workable default.
- Fintechs may put greater emphasis on other products or geographies; the push by Revolut and Monzo to expand into the US illustrates the wider search for growth beyond the UK market.
Third-order effects
- The episode underscores that mandated access alone does not ensure usable payment competition; execution at the merchant and consumer layer determines whether openness becomes a substitute for incumbents.
- If this pattern persists, open banking may remain infrastructure for fintech services rather than become a broad card-displacement mechanism.
The trend: Open-finance policy is moving from creating access rights to proving whether those rights can produce durable, widely adopted payment products.