How Open Banking is Opening Business Opportunities

Open banking has put control back in the hands of consumers. But does it go far enough? Some say open finance is the next step to a better experience across the entire suite of financial products and services…

How open banking is opening business opportunities

Open banking has changed the game for the payments sector. Like most new systems and technologies though, it’s had its fair share of critics. What is undeniable however is the explosive growth in those adopting an open banking framework since its launch  – one 6 month period in the UK alone saw more than 1 million new adopters. 


Million open banking payments had been made at the end of 2021. An increase of more than 500% in 12 months.

 There’s no doubt – open banking isn’t a future concept, it’s here and now in the mainstream.

But what is – and what benefits does it bring those that use it?

What is open banking?

“Open banking is the practice of securely sharing financial data between banks and third-party service providers, such as fintech apps.”


In simple terms: open banking puts users in control. It lets users manage their financial information and access it across different platforms – and getting a smoother, more personalised experience in the process.

It does this through the use of application programming interfaces, or APIs, which are software intermediaries that let two programs communicate with each other. Previously, consumer financial data was controlled by big banks. Since open banking was introduced, the bank APIs are now available publicly so third-party providers (including fintechs) can use the information within them to build and create new – and better! – experiences.

Obviously, the sharing of data with third parties raises significant security concerns, which is why open banking is such a heavily regulated system. In the UK, only apps and websites regulated by the FCA or European equivalent can enrol in the open banking Directory. Anyone that opts into open banking is protected by data-protection laws and the Financial Ombudsman Service, meaning that a bank or building society will pay to reimburse users in the unlikely event of any fraudulent activity.

Benefits for all

“This Standard has activated a fintech renaissance in the UK, and inspired similar initiatives all over the world. It opens secure connections between apps and banks to enable innovation across financial services and ecommerce. Customers have gained control of their transaction data, and benefit from low friction, high security, financial interactions.”

Open banking is signalled a new wave in the advancement of banking and technology. By levelling the playing field for startups and tech platforms, open banking encourages innovation. The knock-on effect of this is greater pressure on traditional incumbents to improve their offerings, both in price and experience. 

Consumers: Open banking gives consumers more control over their financial data and often provides access to improved technology and customer service at a lower cost.

Financial services providers: Open banking encourages innovation among banks and third-party service providers, leading to more choices for consumers.

Businesses: Open banking data helps businesses understand their customers, allowing them to personalise their products, service offerings and communications.

A recent report by the body that oversees open banking in the UK has found that since its inception, the resulting propositions have largely addressed: 

  • Improved financial decision-making 
  • Expanded payments choice 
  • Better borrowing 

It’s no surprise that according to recent data from the nine biggest UK banks that had to implement open banking, more than five million Brits are now using open banking services, with payment services the most popular. 

This figure is forecast to grow significantly given the trajectory of previous growth. A June 2022 report suggested that month-on-month growth was running at around 10%. In the six months to March 2022, there were 21.1m open banking payments, compared with 6.1m in the same period in 2021.

Open finance: the next phase

As open banking continues to find its way into the mainstream, innovators are looking towards the next phase of facilitating a better banking experience. Many believe this will be open finance. Open finance aims to take open banking a step further, with finance firms sharing data across more services such as mortgages and loans – essentially someone’s entire financial footprint – via APIs, with the aim of offering tailored products and services from external organisations.

A group of European fintechs launched the Open Finance Association (OFA) in September 2022 with the goal of further opening up financial data through APIs. Founding members include Volt, Truelayer, Worldpay and Gocardless.

“Open finance is the next step in the evolution of open banking. By bringing the benefits of open banking to a broader array of financial products, open finance will give consumers and businesses greater control and visibility of their economic lives.”

According to a statement by the OFA.

“Now is the time for industry, policy-makers and regulators to come together and make open finance a reality. Through the promotion of an API-focused agenda in both payments and data, OFA aims to promote a healthy and sustainable fintech ecosystem, in which consumers and businesses all benefit from improved, innovative services.

Nilixa Devlukia, chair of the OFA.

Supporters believe open finance is the natural next step in the evolution of open banking. They say that by bringing the benefits of open banking to a broader array of financial products, open finance will give consumers and businesses greater control and visibility of their economic lives.

Consumer adoption is only likely however if legislation catches up to ensure the security of the framework, as it has done in the case of open banking. Until then, open banking will remain at the forefront of the better banking movement.

Our platform takes advantage of the possibilities offered by open banking – and you can too. Talk to us to find out how.


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