Open banking is one of the most significant changes to financial services in decades — yet most people couldn't explain what it means. That's about to change.
What Is Open Banking, Simply Explained?
Open banking is a system that lets you securely share your bank account data with third-party apps and services — with your permission.
Before open banking, your financial data was locked inside your bank. You couldn't easily share your transaction history, account balance, or spending patterns with another app, even if you wanted to.
Open banking changes that. It gives you control over your own financial data and lets you share it with apps that can use it to help you.
Think of it like this: Just as you can let Spotify access your Google account to sign up quickly, open banking lets you give financial apps access to your bank data — without handing over your username and password.
How Does Open Banking Work?
Open banking works through standardised APIs (Application Programming Interfaces) — secure digital channels that allow authorised apps to connect to your bank account.
Here's the simple process:
- You choose an app that offers a feature powered by open banking (a budgeting app, a mortgage comparison tool, a payment service)
- You consent to sharing your data — you're shown exactly what data will be shared and for how long
- The app connects to your bank via a secure API
- Your bank verifies the connection is authorised
- Data flows securely to the app — your login credentials are never shared
You can revoke this permission at any time.
Who Regulates Open Banking?
In the UK, open banking is regulated by the Financial Conduct Authority (FCA) and was launched following the CMA's retail banking investigation in 2017. The UK's Open Banking Implementation Entity (OBIE) oversees standards.
Across Europe, it's governed by PSD2 (the Second Payment Services Directive), which requires banks to provide open APIs.
This regulation is why open banking is safe — every third-party accessing your data must be authorised and registered with the FCA or equivalent regulator.
What Can Open Banking Actually Do?
Open banking powers a growing range of services:
Smarter Budgeting
Apps like Monzo, Emma, and Snoop connect to your accounts across multiple banks to give you a complete picture of your finances in one place.
Instant Account Verification
Instead of waiting days for a micro-deposit verification, businesses can instantly confirm your account details — reducing fraud and friction.
Open Banking Payments
You can now pay businesses directly from your bank account, without entering card details. This is faster, cheaper, and more secure than card payments.
Credit Decisions
Lenders can view your real income and spending history (with permission) instead of relying solely on credit scores — helping more people access fair credit.
Wealth Management
Wealth managers use open banking to aggregate client accounts across banks and custodians, giving advisors a complete view of assets without manual data entry.
Who Benefits from Open Banking?
Consumers get better products, lower fees, and more control over their data.
Businesses can verify accounts instantly, accept cheaper payments, and build smarter financial products.
Fintech companies get the data infrastructure to build innovative services without needing a banking licence.
Wealth managers and advisors can aggregate multi-bank data for clients automatically — exactly what platforms like Payxara are built around.
Is Open Banking Safe?
Yes — when used correctly, open banking is very secure. Key protections include:
- Explicit consent — you must actively choose to share data
- Regulated providers only — only FCA-authorised companies can access your data
- No credential sharing — apps never see your password
- Right to revoke — you can withdraw access instantly, at any time
- Time-limited access — most consents expire after 90 days
Voice Search FAQ
Does open banking give companies access to my bank account? No. Open banking gives authorised apps read access to your data — they cannot move money or make changes without a separate, explicit payment authorisation from you.
Is open banking the same as internet banking? No. Internet banking is you logging into your bank directly. Open banking is you granting a third-party app permission to securely access your bank data.
Can I turn off open banking? Yes. You can revoke any open banking permission through your bank's app or by contacting the third-party provider directly.
Which banks support open banking in the UK? All major UK banks are required by law to support open banking, including Barclays, HSBC, Lloyds, NatWest, Santander, Halifax, Nationwide, and all major challenger banks.
Open banking is the infrastructure layer that's enabling a new generation of financial services — from smarter budgeting apps to institutional wealth management platforms. Understanding how it works puts you in control of your own financial future.