Open banking lets people share their bank account data with other companies, or let those companies start payments from their account, with their permission. The bank has to provide that access through secure connections called APIs, so the customer never hands over their login details. In most countries it began with rules that forced the largest banks to open up.

How open banking works

There are two main uses. The first is reading data. A budgeting app, a lender or an accounting tool asks the customer for permission, the customer approves it in their banking app, and the company can then see balances and transactions for a set period. The second is starting payments: a company can set up a payment from the customer’s account, which the customer approves with their bank. That is what powers pay by bank, covered in our pay by bank explainer.

Before open banking rules, many apps used screen scraping. The customer typed their online banking password into the app, which logged in as them and copied the data off the screen. It worked, but the app held the password and the bank could not tell it apart from the customer. API access replaces that with a permission the customer can see and cancel. Chase now shows customers which outside apps are connected to their accounts and lets them cut access from the Chase app (our report).

Open banking in the UK and Europe

The UK started with a competition ruling. The Competition and Markets Authority ordered the nine largest banks to build standard APIs, and open banking went live in January 2018. By late 2025 more than 16 million people and businesses were using it, according to Open Banking Limited, and in July 2026 the ecosystem passed one billion payments. The FCA published an open finance roadmap in April 2026 that starts with small business lending and mortgages, and plans to consult on a long-term framework for open banking by the end of 2026.

In the EU, open banking comes from the second Payment Services Directive, PSD2, which applied from 2018. Its replacement, a new Payment Services Regulation and PSD3, was provisionally agreed on 21 November 2025. It would give customers a dashboard to see and withdraw the access they have granted, and list the obstacles banks may not put in the way of authorised providers. As of August 2026 it still awaited formal adoption, with most rules expected to apply around 2028. A separate proposal to extend data sharing to savings, investments and insurance, known as FIDA, has had an uncertain path since the European Commission considered dropping it in early 2025.

Open banking in the United States

The US has no open banking law in force. Data sharing grew through aggregators such as Plaid and MX, largely on screen scraping and private agreements with banks. Banks and data platforms are now moving to APIs; Lumin Digital, which builds online banking for credit unions and banks, connected to MX for that reason (our report).

The Consumer Financial Protection Bureau finalised a rule under Section 1033 of the Dodd-Frank Act in October 2024 that would require banks to share customer data for free through APIs. A federal court in Kentucky barred the CFPB from enforcing it in October 2025 while the bureau reconsiders the rule, according to Open Banking Tracker. One of the questions it reopened is whether banks may charge for data access. JPMorgan and Plaid agreed a paid data access deal in September 2025.

Elsewhere

Australia introduced its Consumer Data Right in banking in 2020, and Brazil’s central bank launched open finance in 2021. Both go beyond bank accounts: Australia’s right has been extended to energy, and Brazil’s covers investments and insurance as well as credit.

Questions about open banking

Is open banking safe?

The customer never shares their banking password, access is approved in the bank’s own app, and the companies involved must be authorised. The customer can see and withdraw permissions at any time. The risks are the usual ones for any app holding financial data, such as how well it protects what it collects.

What is the difference between open banking and open finance?

Open banking covers payment accounts such as current accounts. Open finance extends the same idea to savings, pensions, mortgages, investments and insurance. The UK and EU are both working towards it.

Do I have to use open banking?

No. Nothing is shared unless the customer gives permission, and permissions can be withdrawn.

Is pay by bank part of open banking?

In the UK and EU, yes. Pay by bank uses open banking’s payment initiation to start a transfer from the customer’s account. In India and Brazil, similar payments run on national systems.

Why is the US behind?

The CFPB’s rule was finalised in 2024 but has been blocked by a court and is being rewritten, so US data sharing still depends largely on private agreements between banks and aggregators.