Open banking is a system that allows third-party financial services providers (TPPs) to access customer’s financial data from banks and other financial institutions through application programming interfaces (APIs). This allows TPPs to offer new and innovative financial products and services to customers, such as personal financial management tools, budgeting apps, and peer-to-peer payments.
Open banking is regulated by the European Union’s Payment Services Directive (PSD2). PSD2 requires banks to make customer’s financial data available to TPPs through APIs. The UK’s Open Banking Implementation Entity (OBIE) is responsible for implementing PSD2 in the UK.