What Is ‘Open Banking’? How Does It Unlock Consumer Finance Apps?

Do you check all of your account balances on one app? Or use a digital wallet to split the tab with friends? Welcome to the world of open banking, made possible by banks sharing data with financial technology platforms that offer payments, budgeting and other services. It’s the plumbing behind a seamless, convenient future for consumer finance. The approach was pioneered in the UK, and now the rest of the world is catching up — fast.

Open banking refers to a system where banks share data with other financial firms, providing account information such as client names, balances, payments, transaction history, and other details. The practice enables so-called fintech platforms to provide services to the same customers, generally through mobile phone apps, in a competitive and safe banking ecosystem. It’s powered by application programming interfaces, or APIs, the ubiquitous way that multiple programs communicate.