Kanishka NaikOpen banking allows consumers to share financial data with authorized third-party providers via APIs. It expands consumer choice and enables new financial products beyond what traditional banks offer alone.
In 2018, the UK's Competition and Markets Authority directed banks to open their systems to third-party providers. That same year, the EU's updated Payment Services Directive (PSD2) mandated similar secure access across European banking institutions.
Open banking APIs fall into three categories: Data APIs providing read-only account access, Transaction APIs enabling payments and fund transfers, and Product APIs listing financial product terms. All operate under standardized security protocols including OAuth 2.0.