{"head":{"title":"What Is Open Banking? Definition and Example | OceanLab","description":"Open banking lets customers share bank data with, or start payments from, licensed apps through APIs. How it works under PSD2 and common mistakes.","canonical":"https://oceanlab.in/glossary/open-banking"},"crumbs":[{"name":"Home","path":"/"},{"name":"Glossary","path":"/glossary"},{"name":"open banking","path":"/glossary/open-banking"}],"slug":"open-banking","term":"Open banking","aka":["account information services","payment initiation services"],"category":"Payments and fintech","short":"Letting customers give licensed third-party apps access to their bank account data, or let them start payments, through secure bank APIs.","body":[["Open banking connects banks and third-party providers through APIs, with the customer's consent. In the EU it rests on PSD2, which defines two services: an account information service gives consolidated information on one or more of a user's payment accounts, and a payment initiation service starts a payment order from a user's account held at another provider."],["Third-party providers need to be authorised, and every connection needs the customer's consent and ",{"href":"/glossary/strong-customer-authentication","text":"strong customer authentication"}," at the bank. Other countries have their own open banking rules and standards."]],"why":["Open banking makes features possible that used to need screen scraping or manual uploads: instant income checks, account-to-account payments with no card fees, budgeting across banks, and faster ",{"href":"/glossary/reconciliation","text":"reconciliation"},". Most products reach it through an aggregator rather than connecting to every bank."],"example":["A lending app asks applicants to connect their bank account. With consent, it reads twelve months of transactions through an aggregator, checks income and regular outgoings, and gives a decision the same day without asking for statements."],"inBuild":["In a product build, open banking usually means an aggregator integration, consent screens, handling expired consents and mapping messy transaction data into the product's own model."],"mistakes":[["Ignoring consent expiry, so connections quietly stop updating."],["Assuming transaction data is clean. Descriptions and categories vary by bank."],["Keeping more account data than the feature needs."]],"related":[{"href":"/glossary/strong-customer-authentication","label":"Strong customer authentication (SCA)","detail":"The EU rule under PSD2 that online payments and account access must be confirmed with two independent factors from different categories."},{"href":"/glossary/reconciliation","label":"Reconciliation","detail":"Checking that two records of the same money agree, such as your ledger and the bank or provider's statement, and explaining every difference."},{"href":"/glossary/settlement","label":"Settlement (payments)","detail":"The point when money for a payment actually moves into the receiver's account, after the payment was approved and cleared."},{"href":"/glossary/kyc","label":"KYC (know your customer)","detail":"The checks a regulated business runs to confirm a customer is who they say they are and to judge the risk they pose."}],"tools":[{"href":"/tools/fintech-app-cost","label":"Fintech app cost","detail":"Free tool"}],"links":[{"href":"/compliance/psd2","label":"PSD2 guide","detail":"EU payment rules, open banking and SCA."},{"href":"/software/banking","label":"Software for banking","detail":"Banking systems, controls and regulation."},{"href":"/software/personal-finance","label":"Software for personal finance","detail":"Budgeting, saving and money apps."}],"sources":[{"title":"Directive (EU) 2015/2366, PSD2 (Official Journal)","url":"https://eur-lex.europa.eu/eli/dir/2015/2366/oj","checkedAt":"2026-10-25"}],"legal":true,"updatedAt":"2026-10-25"}