Open banking refers to the use of open APIs that enable third-party developers to build applications and services on top of a particular financial institution or group of institutions. This is typically done via an initiative by a bank to open its APIs to third-parties and give those third-parties access to the bank, whether that be access to data (read-only) or access to functionality (read and write access). The latter will be discussed in a future blog post and webinar examining Banking as a Service (BaaS).
PSDII in Europe, and the open banking initiative in the UK, are two examples of open banking standards. The US does not have specific open banking standards. US banks and financial institutions do allow third-party data scraping services such as Plaid, Yodlee, and MX to give users read-only access to their financial data and allow them to easily move money in between institutions. These services are known as Account Aggregation and Instant Account Verification (IAV) respectively, and are an integral part of the Hydrogen Integration Library.
Learn More About Open Banking Around the Globe
84% of financial brands are already developing open banking products, according to a study done by consulting firm TLT, and PWC indicates that 71% of SMEs and 64% of adults will be using open banking technology within 3 years.
We will be hosting our next webinar on September 19th at 11AM. Our Head of Product and Co-Founder, Matthew Kane, will examine open banking trends and differences around the globe, and how Hydrogen layers orchestration and business layers on top to help create amazing fintech products.