Open Banking

About Open Banking

Open banking requires banks to share customer financial data with third parties with customer consent. The concept was pioneered in the UK by the Competition and Markets Authority in 2018 and mandated across the EU by PSD2. Open banking enables fintech companies to offer services including budgeting apps, account aggregation, and alternative lending. The concept spread to Australia, Brazil, and other countries. Open banking potentially disrupts the traditional banking model by reducing information asymmetry and increasing competition. Critics worry about data security and privacy. Open finance, an extension of open banking, would include investment, insurance, and pension data. The US has been slower to adopt open banking through regulation.