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On August 8, 2025, the UK’s Financial Conduct Authority (FCA) shared its feedback on the creation of a new standard-setting body for open banking, known as the “Future Entity”.
This organisation is expected to become the primary body responsible for setting and maintaining open banking standards in the UK, including application programming interfaces (APIs). Its standards are intended to underpin commercial open banking schemes and support innovation in the sector.
The Future Entity will be tasked with monitoring the quality and consistency of technologies used in open banking, helping to inform the FCA’s supervisory work.
Its core responsibilities will include:
- Setting common standards to ensure interoperability.
- Monitoring API performance.
- Ensuring adherence to those standards.
- Providing directory and certification services.
- Working with multilateral agreement operators to support commercial schemes.
The body is expected to be established as a not-for-profit company limited by guarantee, with funding raised on an equitable basis from users and beneficiaries.
However, the Future Entity will not be a public body and will not have enforcement powers.
Looking ahead, the FCA notes that the role of the Future Entity could evolve, potentially extending into open finance. Plans to set up an interim body have been dropped, with the focus now on establishing the Future Entity directly.
Alongside the Future Entity, the FCA has confirmed that a competitive layer of commercial open banking schemes will operate in the market.
These schemes, which may be for-profit or not-for-profit and are expected to be industry-led, will develop the rules governing how firms interact and resolve issues when they arise.
They will rely on the common API standards set by the Future Entity to ensure interoperability, but may innovate beyond these standards to deliver premium services.
Although the Future Entity is not expected to own or operate commercial schemes where market incentives exist, it may step in to run schemes in areas with limited commercial motivation or where market failures occur.
Both the Future Entity and commercial scheme operators are expected to be regulated as interface bodies under the Data (Use and Access) Act (DUAA).
The bigger picture
In March 2022, the FCA, the Payment Systems Regulator (PSR), the Competition and Markets Authority (CMA) and HM Treasury published a joint statement on the future of open banking. They also established the Joint Regulatory Oversight Committee (JROC) to drive innovation and adoption.
Since then, open banking usage in the UK has grown significantly. According to Open Banking Limited’s (OBL) Impact Report 7, published in May 2025, there were 13.3m active users in March 2025, a 40 percent increase on the previous year.
JROC has determined that OBL should be succeeded by a new standards-setting body, the Future Entity, to support interoperability and consistent user experiences across the ecosystem.
The FCA was named lead regulator under the National Payments Vision, and responsibility for open banking now shifts to the Future Entity as JROC winds down.
Open banking in the UK has delivered some successes, particularly around account aggregation and payment initiation, but adoption has fallen short of expectations.
This has also been the case in other jurisdictions, including the EU.
Why should you care?
The incoming Future Entity is designed to resolve the structural weaknesses that have plagued open banking in the UK.
However, Europe as a whole has taken time to adapt to open banking and this may not be the silver bullet that the UK fintech ecosystem is hoping for.
The story so far is that many firms have treated open banking compliance as a regulatory box-ticking exercise instead of a strategic opportunity, and this has inevitably slowed innovation.
The absence of a single, well-funded, enduring standards body has led to inconsistencies and technical friction that have hampered growth.
However, with a mandate of setting minimum service levels, monitoring API performance and providing certification, the Future Entity should increase quality and consistency across the ecosystem.
For fintechs, third-party providers (TPPs) and commercial scheme operators, this offers a more stable foundation on which to build services, reducing costs linked to fragmented standards.
This could pave the way for more reliable, smoother open banking services.
Larger banks may also welcome greater clarity on technical requirements that have often been difficult to interpret, and have left the banking industry unenthusiastic about its involvement in the process.
In addition, the fintech sector should benefit from the introduction of the Future Entity. If the FCA achieves the level of clarity it is aiming for, firms will be able to scale their products more easily against a common framework.
This will be welcome for many that have grown frustrated and disillusioned by the slow uptake and regulatory upheaval of open banking.
Despite the promise, challenges remain.
The fact that the Future Entity will not have enforcement powers will limit its ability to sanction those found to be lagging or undermining the spirit of the legislation.
In addition, commercial incentives for banks and other players may still be weak if monetisation opportunities are unclear, and broader consumer adoption will require trust, strong user experiences and compelling use cases, all of which take time to build.
Contactless payments in the UK took off when Transport for London (TfL) enabled their use for travel, providing a clear use case.
Open banking needs a similar moment or use case that will allow it to really take off.
If that fails to materialise, then it will be difficult for payments firms to justify further investment or generate increased interest from large retail players in the UK.
There is also the question of whether open banking can evolve smoothly into open finance and beyond, or whether regulatory gaps and industry resistance will stall progress.
This has certainly been the case in mainland Europe, and although the UK is a smaller, less-complicated market to navigate than the EU’s 27 member states, the incentives, governance and creation of a successor to open banking in the broader financial space will still be a leap for many.
Next steps
Firms navigating the upcoming changes in UK open banking might want to consider the following actions:
- Ensure that they understand the Future Entity, including how its standards (APIs, interoperability, certification) will impact their operations and compliance.
- Explore commercial schemes, identifying opportunities to participate and develop value-added services.
- Plan for the transition from OBL to the Future Entity, adjusting their roadmap as necessary to align with new governance and technical requirements.
- Manage compliance proactively, reviewing internal controls and risk management to ensure they are robust and effective.
- Identify high-value use cases, focusing on applications that could drive adoption, similar to TfL’s impact on contactless payments.
Those that act quickly to respond to the changes will be best placed to navigate the new UK open banking landscape smoothly and efficiently.
