Open Banking: A Missed Opportunity for Corporate Treasurers in the UK and EU?

Open Banking: A Missed Opportunity for Corporate Treasurers in the UK and EU?

By Treasury Masterminds

Open banking, heralded as a transformative force in financial services, has yet to deliver its full potential, particularly for corporate treasurers in the UK and EU. While the concept promises enhanced data sharing, streamlined financial processes, and improved efficiency, the reality has been marred by slow adoption, regulatory challenges, and technical complexities.

Slow Adoption: A Global Perspective

In the UK, open banking’s journey began with regulatory mandates aimed at fostering competition and innovation. However, consumer adoption has been tepid. For instance, in March 2025, open banking payments totaled just 27 million, a stark contrast to the 1.92 billion card transactions in February. This disparity underscores the challenges in shifting established payment behaviors.

Similarly, across the EU, the implementation of open banking has been inconsistent. Countries like France and Spain have made strides, but others lag due to varying regulatory approaches and market readiness. As adoption remains slow in both regions, businesses—including corporate treasurers—find it difficult to justify the investment in open banking systems without a proven, widespread user base.

Challenges Hindering Adoption

Several factors contribute to the sluggish uptake of open banking:

1. Lack of Consumer Incentive

While open banking offers numerous advantages—such as enhanced control over payments, greater transparency, and better access to financial products—the incentives for consumers to adopt it have not been compelling enough. Corporate treasurers, too, face challenges as businesses are often risk-averse when adopting new technologies without clear, measurable benefits. Despite regulatory efforts, adoption remains slow. Without a strong consumer push to adopt open banking services, businesses find themselves unable to leverage the full potential of the systems.

  • Why it matters to Corporate Treasurers: For open banking to succeed within corporate treasury, treasurers must see its value in streamlining treasury management, enhancing cash flow forecasting, and improving payment efficiency. If adoption remains slow on the consumer side, it can be difficult for corporate treasurers to justify investment in the systems that support it. A lack of consumer demand for open banking services (e.g., direct bank account integration) means limited service offerings that businesses can take advantage of, slowing corporate adoption.

2. Security and Privacy Concerns

Security remains one of the most significant barriers to the adoption of open banking. For consumers and businesses alike, trusting banks and fintechs with sensitive financial data is no small matter. The idea of open APIs that allow third-party providers access to banking information raises serious concerns over data privacy, identity theft, and fraud.

  • Why it matters to Corporate Treasurers: For corporate treasurers, security is a top priority. Implementing open banking can increase the attack surface for financial transactions, and if banks or third parties experience a data breach, the consequences can be catastrophic. Treasurers must ensure that any open banking solution they implement complies with strict data protection laws (like GDPR in the EU) and has robust encryption and authentication protocols in place.
  • Example: In the UK, high-profile security incidents involving open banking APIs have created skepticism among both consumers and businesses about the security of these systems. This affects trust in open banking platforms, making businesses reluctant to fully adopt them without a guarantee of secure data exchange and financial transactions.

3. Fragmented Standards

Open banking, as it currently stands, is far from a one-size-fits-all solution. In both the UK and EU, there is no uniform technical standard across financial institutions. Different banks have adopted different API frameworks, authentication mechanisms, and data-sharing protocols. This fragmentation means that businesses and treasury teams have to deal with varying levels of integration complexity when trying to connect with multiple financial service providers.

  • Why it matters to Corporate Treasurers: For treasurers, dealing with multiple bank systems that don’t speak the same “language” creates operational inefficiencies. Integrating different banking systems into one cohesive platform for treasury management becomes cumbersome, time-consuming, and costly. The more diverse the systems in place, the harder it is to build an efficient, scalable treasury management system that utilizes open banking APIs.
  • Example: In the EU, where banking systems and regulations vary widely from country to country, companies need to invest in costly integration solutions to ensure they can access real-time data from multiple bank accounts in different jurisdictions. This integration issue creates a barrier for treasurers seeking to consolidate their banking relationships under the promise of open banking’s seamless functionality.

4. Regulatory Complexity

Open banking is heavily regulated, with different requirements and standards across countries. The EU’s Revised Payment Services Directive (PSD2) governs the open banking landscape, but its interpretation and enforcement differ from one country to another. Similarly, the UK has its own regulatory framework post-Brexit, which complicates cross-border adoption.

  • Why it matters to Corporate Treasurers: Corporate treasurers operating in multiple jurisdictions face the challenge of complying with various regulatory environments. Different legal frameworks across the UK and EU make it difficult for businesses to streamline their banking relationships, as treasurers must ensure they meet all compliance requirements, including data protection laws, anti-money laundering (AML) requirements, and know-your-customer (KYC) procedures.
  • Example: A UK-based corporate treasurer seeking to implement open banking may find that PSD2 regulations apply in certain EU countries, but different local laws and financial institution requirements govern the use of open APIs elsewhere. Navigating these varied regulatory landscapes can result in delays and compliance risks, especially when implementing new open banking initiatives.

5. Lack of Readiness Among Banks and Fintechs

While the regulatory environment may be pushing for open banking, many banks and fintechs have been slow to fully embrace and implement the necessary systems. Many banks still operate with legacy technology, which makes it difficult to integrate open banking APIs into their infrastructure. Additionally, fintechs, while innovative, often lack the resources or expertise to develop secure, reliable APIs that comply with all relevant regulations.

  • Why it matters to Corporate Treasurers: For treasurers to take full advantage of open banking, they need to have access to reliable, functional APIs that offer the necessary integrations for payments, cash management, and financial forecasting. If banks and fintechs are not ready or willing to adopt the necessary technologies, corporate treasurers are left with limited options for accessing the benefits promised by open banking. This further slows down adoption and limits the use of open banking to merely a “nice-to-have” feature instead of a transformative tool.

6. Adoption Costs

Implementing open banking can require a significant upfront investment. While it promises cost savings and efficiencies in the long run, many businesses—especially SMEs—are deterred by the initial costs of setting up the necessary infrastructure. For corporate treasurers, investing in the technology to integrate open banking systems into their TMS (Treasury Management Systems) may seem like a luxury if they are not convinced of the short-term returns.

  • Why it matters to Corporate Treasurers: For many corporate treasurers, particularly in small and mid-sized companies, the decision to adopt open banking comes down to cost-benefit analysis. Without clear, immediate returns, many treasurers may hesitate to allocate the budget to implement these systems. Additionally, maintaining open banking integrations can be costly, requiring ongoing investment in IT support and system upgrades.

Looking Ahead

Despite these challenges, there is cautious optimism. The EU’s proposed Financial Data Access (FIDA) regulation and the UK’s Data Use and Access Bill aim to standardize data sharing practices, potentially paving the way for more cohesive open banking ecosystems.

For corporate treasurers, staying informed about these developments and actively engaging with industry initiatives will be crucial in leveraging the benefits of open banking as they materialize.

Conclusion

Open banking holds significant promise for corporate treasurers in the UK and EU. However, realizing this potential requires overcoming existing barriers related to adoption, integration, and regulation. With concerted efforts from regulators, financial institutions, and businesses, open banking can evolve from a concept to a cornerstone of modern corporate finance.

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