New research has placed the UK as Europe’s leader in the adoption of open banking.

The country came first in a study by Yapily, ahead of second place Germany and third place Sweden.

The countries were ranked on several criteria, including local regulatory oversight and enforcement, digital readiness of the population, domestic payments infrastructure, bank integrations, presence of third-party providers (TPPs), and API performance and standardisation.

The UK scored highly, according to Yapily, based on the country’s significant political support and a pro-innovation regulatory environment. The UK also boasts the highest number of registered third-party providers in Europe, promoting the development of its open banking ecosystem.

Open banking focuses on open-source technology, transparency, and privacy, giving users control over how their data is used. With customers able to securely share their financial data between organisations, it enables faster transfers between service providers and opens up a wider range of services.

This in turn helps the banking industry adopt new technology, boosting innovation and protecting consumers.

Open Banking in the UK has undergone significant growth in recent years.

Since being introduced on January 13th, 2018, when the Payments Services Directive 2 (PSD2) came into force, the standards reached 6 million UK users last month, less than four months since hitting 5m users.

With it taking 10 months to go from one to two million users in 2020, the growth shows a marked acceleration in their adoption.

Stats also showed that open banking payments grew 500% year on year this year, with May alone seeing businesses and consumers make 5m open banking-driven payments.

In part, the recent growth was driven after HMRC became the world’s first government department to adopt the standards. By adding a ‘pay by bank‘ option to its annual self-assessment process, the number of open payments grew 19.3% from December 2021 to January 2022.

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However, Yapily warned that there are a still challenges and opportunities on the horizon for European open banking. Improved collaboration between banks, governments, regulators, and TPPs at the local and EU level is needed to address a lack of standardisation and inconsistent levels of regulatory oversight and enforcement.

Founder and CEO of Yapily Stefano Vaccino commented: “The league table shows that Europe is making significant strides in open banking, but we must continue to press on.

“We are on the brink of a financial revolution that will help to create better and more accessible financial services for everyone. I’m excited to watch these markets continue to drive innovation and adoption forward as we evolve from open banking towards open finance – and beyond that horizon, open data.”

“Whilst the ecosystem as a whole is moving in the right direction, discrepancies across EU member states could slow the rate of progress. Although the European Commission has proposed to implement an open finance framework by 2024, member states that are still behind in open banking could face a number of interoperability challenges, exacerbating the fragmentation that already exists.”

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