Open Banking

Traditionally, banks kept customer data to themselves. Open banking, driven by regulation, requires banks to share customer data through secure technology called application programming interfaces, but only when the customer gives permission.

In the United Kingdom, open banking was introduced in 2018 following a competition review, and the European Union's Second Payment Services Directive created a similar framework across member states. Other countries, including Australia, Brazil, India and Singapore, have developed their own approaches, and the United States has been developing rules for consumer data sharing.

For example, a customer could use a budgeting app that pulls in transactions from all their bank accounts in one place, or apply for a loan where the lender checks their income directly from their bank data. Open banking also allows payments to be made directly from a bank account, without using a card.

Open banking aims to increase competition, encourage innovation and give consumers more control over their financial data. Customers can review and withdraw permissions at any time. Security and privacy are protected by regulation, strong authentication and requirements that providers be authorised.