Open banking
Open banking is a framework in which banks expose customer account data and payment-initiation capabilities to authorised third parties through secure APIs, with the customer's consent.1 It underpins much of Europe's fintech growth after PSD2 and influences how neobanks, budgeting apps and embedded finance products connect to incumbent rails.
Overview
Open banking typically covers account-information services (read balances and transactions) and payment-initiation services (start a payment from a bank account). Regulators aimed to increase competition and innovation; banks must provide standardised API access rather than only screen scraping.
PSD2 and Europe
The EU's revised Payment Services Directive (PSD2) made open banking mandatory for many European banks. UK Open Banking standards and directories accelerated challenger and neobank product design—Monzo, Starling Bank and Revolut both consume and expose ecosystem connectivity.
Global variants
Similar regimes exist or are emerging in Australia (Consumer Data Right), Brazil (Open Finance), India (Account Aggregator), and parts of Asia and North America (often market-led via Plaid-style aggregators rather than a single PSD2-style mandate).
Relation to neobanks
Neobanks use open banking to import external accounts, verify income and compete for the primary financial relationship. Incumbents use it to remain account providers while third parties own the UX—complementing banking as a service and partner bank models.
References
- Open banking enables consented third-party access to account data and payment initiation via APIs. https://www.openbanking.org.uk/
Frequently asked questions
- What is Open banking?
- Open banking is a regulatory and technical framework that lets third parties access bank data and initiate payments with customer consent via APIs.
See also
- Airwallex — Airwallex is an Australian-founded business fintech for global accounts, payments and spend management.
- Alex Johnson — Alex Johnson is the founder of Fintech Takes, a widely read fintech newsletter and podcast; he is active on X as @AlexH_Johnson.
- Alexandre Prot — Alexandre Prot is co-founder and CEO of Qonto, the Paris-based European business neobank.
- Ali Niknam — Ali Niknam is founder and CEO of Bunq, the Amsterdam-based licensed Dutch neobank.
- Ally Bank — Ally Bank is a large U.S. online bank offering deposits, loans and investment products without branches.