A system in which banks securely share customer financial data with authorized third-party apps through APIs, with the customer's consent.
Open banking gives customers control over their banking data. With permission, a budgeting app can read transactions from several bank accounts in one place, a lender can verify income without paper statements, or a payment app can initiate a transfer directly from a bank account.
Regulators in places such as the United Kingdom and the European Union have required banks to provide secure APIs for this purpose, while other markets have developed similar frameworks, including India's account aggregator system. Strong authentication, clear consent screens, and the ability to revoke access are central to the model. Supporters say open banking increases competition and innovation, while critics highlight privacy and security risks that must be managed carefully.
Application Programming Interface: a defined set of rules that lets one piece of software request data or services from another.
FinTechFinancial technology: software and services that improve or automate financial services such as payments, lending, and investing.
InteroperabilityThe ability of different systems, devices, or applications to exchange data and work together without special effort from users.
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