What is open banking?

What problem does open banking solve?

Your bank knows a lot about your finances: balances, income, spending, regular bills. Without a regulated sharing route, the simplest way to show that information to another service is to download statements and pass them on yourself.

Open banking creates a regulated, permission-based route instead. The UK Financial Conduct Authority (FCA) describes it as a secure and regulated way for people and businesses to share access to payments data from their bank account with trusted apps and services. In the EU, the rules sit in the revised Payment Services Directive (PSD2), which the European Commission says was adopted in 2015 and applied from January 2018.

The FCA frames the goal as an ecosystem that drives competition, innovation and growth: if other firms can use your data with your permission, they can offer budgeting tools and payment options alongside your own bank's. It is one of the clearest examples of fintech built on rules rather than on a single app.

What can an open banking app actually do?

The European Central Bank explains PSD2's two core services. Most open banking products are built from one or both of them.

An account information service reads; it cannot move money. A payment initiation service moves money, but only for the payment you approve.

How does open banking keep your account safe?

Three safeguards matter most. First, consent: according to the ECB, PSD2 requires explicit consent from the payer before a transaction is executed. Second, authorized providers: banks may not block or obstruct account information and payment initiation services, but they can deny access if the provider is unauthorized or fraud is suspected. Third, strong customer authentication: for remote transactions, your bank must check at least two of something you know (a password or PIN), something you have (your phone or card) and something you are (a fingerprint or face). These rules applied from 14 September 2019.

How is open banking regulated in the UK, EU and US?

The three regions arrived at open banking by different roads, and their rules are still changing.

• European Union. PSD2 sets the rules. On 28 June 2023 the Commission proposed a new directive (PSD3) and a Payment Services Regulation, and the European Commission records a political agreement on them on 27 November 2025.
• United Kingdom. The FCA reported in December 2025 more than 16 million users, open banking payments up 53% year on year, and variable recurring payments making up 16% of open banking transactions. It also said the Treasury expects to legislate in 2026 to give the FCA new powers to set open banking rules.
• United States. The CFPB issued its Personal Financial Data Rights rule on 22 October 2024, requiring covered providers to make account data available to consumers and authorized third parties. In August 2025 it opened a reconsideration of parts of the rule, so check the CFPB's page for the current position.

What mistakes do people make with open banking?

• Giving your bank password to an app. Regulated open banking does not need it; you approve access with your own bank.
• Not checking the provider. Look up the firm in the official register before connecting, as explained in how to check if a platform is registered.
• Forgetting old connections. Review which apps can still see your accounts and remove those you no longer use.
• Approving a payment without reading the payee. You are authorizing that payment yourself, so check the payee name and amount every time. Scammers rely on rushed approvals; see common scams.

Is open banking the same as open finance?

Not quite. Open banking covers payment accounts. Open finance is the idea of extending consent-based sharing to savings, investments, pensions and insurance. The FCA covers both topics together on its open banking and open finance page. Investment services such as robo-advisers fall on the open finance side of that line.