In January 2024, consumers in the United Kingdom made a record-breaking 14.5 million open banking payments. This milestone shows how dramatically the financial services industry has changed. It's the result of years of regulatory work that kicked off back in 2017, when the UK's Competition and Markets Authority (CMA) first required banks to adopt open banking.

Let's start by defining some key terms:

• - **Open banking:** A regulated system that allows everyday consumers to safely share their financial information with approved outside companies through standardized Application Programming Interfaces (APIs).
• - **Active user:** A person or business that has used open banking services at least once within the past month, whether that's through sharing their financial data or kicking off a payment.
• - **API call:** A single request sent by an outside company to pull financial data directly from a bank's systems.

By November 2023, there were 8 million active open banking users in the UK. By July 2024, [**the UK hit 10 million active users**](https://www.pymnts.com/news/banking/2024/uks-open-banking-milestone-what-10-million-users-mean-for-uks-financial-services-future/)**the UK hit 10 million active users**, which works out to about 15% of the UK's population. [Open banking in the UK continues to evolve](https://konghq.com/blog/enterprise/commercial-open-banking)Open banking in the UK continues to evolve. But this isn't just a UK trend — growth has been picking up in a big way across multiple regions around the world.

Open banking gives everyday consumers and businesses more control over their finances through regulated data sharing. Users can safely share their financial information with approved outside companies through standardized APIs. This does away with the old, insecure practice of screen scraping and puts consumers in the driver's seat when it comes to who gets access to their data.

The market opportunity here is huge. According to Grand View Research, **the global open banking market was **[**valued**](https://www.grandviewresearch.com/industry-analysis/open-banking-systems-market)**valued**** at $31.61 billion in 2024**. Industry projections indicate it could climb all the way to $135.17 billion by 2030, growing at a compound annual growth rate (CAGR) of 27.6% between 2025 and 2030.

Why does this matter? Three key reasons.

• - **Consumer empowerment:** Users control their financial data and access better products
• - **Fintech innovation:** Startups build services without creating banking infrastructure
• - **Banking evolution:** Traditional banks transform into platform businesses

Open banking brings together traditional banks, innovative fintechs, and enterprises, ushering in unprecedented opportunities for collaboration. Organizations leverage open banking APIs to access previously siloed financial data, building new services that address real consumer needs:

• - **Personal Finance Management (PFM) Apps:** Applications like Mint and Yolt aggregate data from multiple banks, giving users powerful insights into spending habits and financial health.
• - **Seamless Payment Solutions:** Platforms such as Plaid and Tink facilitate direct account-to-account transfers, eliminating friction from traditional payment processes.
• - **Intelligent Investment Platforms:** AI-powered robo-advisors analyze aggregated financial data to deliver customized investment strategies, making advanced financial planning accessible to a broader audience.

For businesses, ensuring proper [management of open banking APIs](https://konghq.com/blog/enterprise/managing-open-banking-apis-with-kong)management of open banking APIs is necessary to comply with regulatory standards while moving fast to leverage new opportunities.

**Core concepts and value proposition**

Open banking replaces password sharing with secure, token-based access. In the past, screen scraping forced customers to hand over their banking credentials to third-party apps, inviting serious security risks. Today, open banking removes that exposure by using OAuth 2.0 and standardized APIs to enable safe, permission-based data sharing.

The value of open banking looks different depending on who you ask.

**For consumers, it means:**

• - A unified view of accounts across multiple banks
• - Faster loan approvals due to easily available, real-time financial data
• - Lower-cost payment options beyond traditional card networks
• - Full control over what data is shared and with whom

**For fintechs, it delivers:**

• - Reliable API contracts instead of fragile screen scraping
• - Lower barriers to entering the financial services market
• - Real-time data for more accurate risk assessments
• - Standardized integrations that scale across banks

**For banks, it unlocks:**

• - New revenue streams through premium APIs
• - Platform-driven business models that extend beyond traditional banking
• - Lower operational costs through automation
• - Stronger alignment with regulatory requirements

**1. Secure authorization flows**

Open banking relies on OAuth 2.0 and [](https://konghq.com/blog/engineering/openid-vs-oauth-what-is-the-difference)[OpenID Connect](https://konghq.com/blog/engineering/openid-vs-oauth-what-is-the-difference)OpenID Connect (OIDC), reinforced by Financial-Grade API (FAPI) standards, that add an extra layer of protection for financial transactions. Customers can grant explicit consent to share their data without ever exposing their passwords.

**The key security features include:**

• - Token-based authentication that removes the need for password sharing
• - Time-bound access that automatically expires
• - Fine-grained permissions for specific data types
• - The ability to revoke consent at any time
• - End-to-end audit trails that track every access event

**2. Standardized data schemas and APIs**

Interoperability depends on consistent data formats across all participants. A fintech should be able to connect to any bank using the same endpoints and get the same structured response every time. For example, the /accounts/{accountId}/balance endpoint returns a standardized payload regardless of the provider.

**Standardization typically covers:**

• - **Account Information Services (AIS):** Uniform formats for balances, transactions, and account details
• - **Payment Initiation Services (PIS):** Consistent methods for one-time payments and recurring transactions
• - **Error handling:** Common error codes and messages across implementations
• - **Data types:** Standardized date formats, currency codes, and field names

**3. Governance and accreditation**

Trust frameworks ensure that only vetted participants can access sensitive financial data. According to a recent [report](https://www.openbanking.org.uk/insights/latest-impact-report-shows-strong-growth-and-the-power-of-payments/)report in the UK, adoption continues to soar, reaching about 18% among small businesses and 13% among consumers as of January 2024. Every participant must pass rigorous security audits and certification before joining the ecosystem.

**Core governance components include:**

• - Central directories that list accredited participants
• - Technical certification requirements
• - Ongoing compliance monitoring
• - Formal dispute resolution processes
• - Defined procedures for responding to security incidents

Open banking delivers its capabilities through several specialized API layers.

**Identity and authentication layer**

Strong Customer Authentication (SCA) requires multi-factor verification to confirm a user’s identity. This typically includes:

• - Something you know (such as a password or PIN)
• - Something you have (such as a phone or hardware token)
• - Something you are (such as biometric verification)

**Account information services (AIS)**

AIS APIs provide secure, read-only access to key financial data, including:

• - Real-time account balances
• - Transaction histories (often up to 24 months)
• - Account features and limitations
• - Standing orders and direct debits
• - Credit card transactions

**Payment initiation services (PIS)**

PIS APIs support a range of payment scenarios, such as:

• - One-time, immediate payments
• - Future-dated transactions
• - Variable recurring payments (VRP)
• - Batch payment processing
• - International transfers

The Financial-Grade API (FAPI) standard continues to evolve, tightening security while making implementations easier to manage. FAPI 1.0 introduced critical safeguards but often came with added complexity. In contrast, FAPI 2.0 builds on that foundation by simplifying requirements without compromising protection.

**The key FAPI 2.0 improvements:**

One of the most important updates is **Pushed Authorization Requests (PAR)**. Instead of sending authorization parameters through the browser, they’re delivered directly to the authorization server. This approach shrinks the attack surface and helps prevent request tampering, resulting in a more secure authorization flow.

Open banking's potential may best be illustrated through real-world success stories, such as that of SEB, a leading Nordic corporate bank. SEB's transformation into an API-first organization exemplifies the profound impact of strategic API management on financial services.

### **SEB's API transformation**

Faced with the need to modernize its API platform, the team at SEB began work to [enhance its open banking capabilities](https://konghq.com/customer-stories/sebs-api-platform-investment-reducing-costs-and-time-to-market)enhance its open banking capabilities. Daniel Franzén, Head of Open Banking at SEB, shared insights into their transition. Initially, SEB struggled with a cumbersome API platform that hindered agility and innovation. After evaluating multiple solutions, SEB chose Kong for its robust API management capabilities.

Franzén emphasized the importance of APIs as both a technological and business asset within SEB. Kong's solution was pivotal in simplifying their architecture, reducing complexity, and enabling faster time-to-market for new services.

####

**Business impact and innovation**

SEB's adoption of Kong led to a streamlined API management process, allowing for approximately 200 APIs across external and internal products. This transformation not only reduced development costs but also attracted new business opportunities by showcasing SEB's API offerings to prospective clients.

SEB's story is a testament to the transformative power of effective API management in Open Banking. By aligning technology with business objectives, SEB has positioned itself to thrive in the evolving financial landscape. Their experience underscores the critical role of API platforms like Kong in driving innovation, enhancing customer experiences, and maintaining competitive advantage.

For more insights into how Kong is empowering financial institutions to harness the potential of Open Banking, explore our [customer stories](https://konghq.com/customers)customer stories and [solutions for open banking](https://konghq.com/solutions/open-banking)solutions for open banking.

Banking as a service (BaaS) is making a financial institution’s digital banking services available through a third party’s products. These third parties can then offer customers things like payment services and loans without having to acquire a banking license and meet the regulatory requirements that banks must. BaaS allows these third parties to pick and choose the digital banking services they wish to use and embed these banking services into their products. 

The rise of *Banking as a Service* (BaaS) allows non-financial companies to seamlessly integrate banking services into their platforms. For instance, consumers can split ride costs with friends in a single tap, or arrange installment payments during online checkout without leaving the merchant's website. These embedded financial experiences dramatically expand consumer choice and convenience, representing a paradigm shift in how consumers access and use financial services.

The communications needed to handle BaaS are done securely via APIs. The third party using the bank's services never directly has access to a customer’s finances — they only act as an intermediary. Banking as a service is sometimes also called white-label banking or private-label financial services.

Like Open Banking, BaaS can create new sources of revenue and deliver a better customer experience. And the connections that make this possible are done via financial APIs. But banking as a service is NOT the same as Open Banking. Open banking is about access to a bank’s data while banking as a service is about third parties using complete banking services in their own products.

### **The value of strategic partnerships**

The fintech landscape is evolving from competition between banks and startups to collaboration. Rather than competing directly, many traditional banks and fintech companies have discovered the power of collaboration. Banks contribute established infrastructure, trusted reputations, and regulatory expertise, while fintechs bring agility, innovation, and new technologies. Successful partnerships, such as Goldman Sachs with Apple Card and BBVA's Open Platform, highlight how these complementary strengths create superior customer experiences.

**United States: Section 1033 and market evolution**

The U.S. open banking market blends voluntary adoption with a growing push toward regulation. On October 22, 2024, the Consumer Financial Protection Bureau (CFPB) released its [Final Rule on Personal Financial Data Rights](https://www.consumerfinance.gov/personal-financial-data-rights/)Final Rule on Personal Financial Data Rights, but the broader regulatory picture has been evolving ever since.[](https://www.consumerfinance.gov/personal-financial-data-rights/)

Current dynamics include:

• - [Legal challenges](https://www.congress.gov/crs-product/IF13117)Legal challenges from Forcht Bank, the Bank Policy Institute, and the Kentucky Bankers Association, which argue that the final rule exceeds statutory authority
• - Roughly 70% of UK consumers now connect their financial accounts to money management tools (included here for global context), according to a [Mastercard report](https://www.mastercard.com/europe/en/news-and-trends/Insights/2024/the-acceleration-of-open-banking-in-the-uk.html)Mastercard report.
• - Strong market momentum despite ongoing regulatory uncertainty

The framework is still evolving, with active debates around:

• - **Representative definition:** Whether access should be limited to fiduciary relationships or expanded to include a broader set of third parties
• - **Fee structures:** Whether providers should be allowed to recover costs
• - **Privacy requirements:** How to balance innovation with meaningful consumer protections
• - **Security standards:** What specific technical controls should be required

**European Union: From PSD2 to PSD3/PSR evolution**

Europe leads global open banking adoption through regulatory frameworks. The European Commission proposed updates to modernize PSD2 into PSD3 and introduce a [Payment Services Regulation (PSR)](https://www.aciworldwide.com/psd3)Payment Services Regulation (PSR) to continue supporting competition while strengthening consumer protections.

PSD3/PSR enhancements:
Proposed PSD3/PSR enhancements focus on strengthening security, improving consumer protections, and promoting fair competition across the payments ecosystem.

**Enhanced fraud prevention**

• - Expanded fraud prevention measures, including structured information sharing
• - Mandatory name and IBAN verification
• - Real-time fraud detection expectations
• - Shared fraud intelligence databases to help institutions spot threats faster

**Consumer protection**

• - Required access to human support for payment-related issues
• - Greater transparency around fees upfront
• - An [18-month transition period](https://riskandcompliance.freshfields.com/post/102j643/from-psd2-to-psd3-and-psr-european-parliament-sets-out-its-vision-on-the-future)18-month transition period after the regulation takes effect
• - Stronger dispute resolution processes

**Market competition**

• - Performance standards for APIs to support reliability and uptime
• - Fair access provisions for ecosystem participants
• - Increased regulatory oversight
• - Standardized error reporting to improve consistency and troubleshooting

**United Kingdom: A global open banking success story**

The UK is now a classic model for regulatory-led open banking. A combination of clear mandates, strong governance, and practical standards has helped drive meaningful adoption across both consumers and businesses.

**Adoption metrics**:

• - 10 million active users as of July 2024
• - 14.5 million open banking payments recorded in January 2024
• - 4.3% of Faster Payments were initiated through [open banking by January 2024](https://www.openbanking.org.uk/wp-content/uploads/Impact-report-6-march-2024.pdf)open banking by January 2024
• - Penetration reached 18% among small businesses and 13% among consumers

**The key success factors:**

• - A Competition and Markets Authority (CMA) mandate requiring the nine largest banks to build open banking infrastructure
• - Strong oversight from the Open Banking Implementation Entity (OBIE)
• - Clear, consistent technical standards and specifications
• - A focus on real-world use cases that deliver immediate value

**Leadership in variable recurring payments (VRP):**

• - VRPs accounted for [8% of open banking payments](https://market.us/report/open-banking-market/)8% of open banking payments in January 2024
• - Commercial VRP programs are expanding beyond “sweeping” into broader payment scenarios
• - Premium API offerings are opening up new revenue opportunities

**Emerging markets: A quick tour**

Several markets are rapidly advancing open banking, each with its own regulatory approach, infrastructure, and innovation priorities.

**India**

• - The Account Aggregator framework is already supporting significant API traffic
• - Integration with India Stack (including Aadhaar and UPI) helps create a highly connected financial ecosystem

**Brazil**

• - Leading Latin America in open banking adoption
• - Strong alignment with the Pix instant payment system
• - Open Finance initiatives are expanding data sharing beyond traditional banking

**Australia**

• - The Consumer Data Right (CDR) framework is extending data portability beyond banking
• - Active expansion into sectors like energy and telecommunications
• - A growing emphasis on cross-sector data sharing

**Singapore**

• - Monetary Authority of Singapore (MAS) guidelines require digitally traceable consent
• - SGFinDex brings together banking, government, and investment data in one view
• - Continued focus on integrating wealth management services

**Canada**

• - A consumer-driven banking framework is currently in development
• - High levels of bank–fintech collaboration persist even without formal regulation

**Growth trajectory at a glance**

Open banking adoption is accelerating worldwide, with strong momentum across market size, usage, and innovation.

**Market growth projections:**

• - The global market is expected to grow from $31.61 billion in 2024 to $135.17 billion by 2030
• - Projected 27.6% CAGR between 2025 and 2030
• - Europe accounted for roughly 36.4% of the market share in 2024

**Regional leadership:**

• - Europe continues to lead with about 36.37% market share
• - Asia-Pacific is posting strong year-over-year growth

**Use case distribution**

Adoption patterns vary by region, with different markets leaning into different applications.

**United Kingdom:**

• - Open banking payment [adoption surpassed data-sharing usage](https://www.openbanking.org.uk/wp-content/uploads/Impact-report-6-march-2024.pdf)adoption surpassed data-sharing usage in August 2023
• - HM Revenue & Customs [collected over £3 billion in tax payments via open banking](https://www.pymnts.com/news/banking/2024/uks-open-banking-milestone-what-10-million-users-mean-for-uks-financial-services-future/)collected over £3 billion in tax payments via open banking in 2024
• - Variable Recurring Payments (VRPs) are gaining traction for subscriptions and e-commerce

**Consumers vs. businesses:**

• - Small business penetration stands at 18%, compared to 13% among consumers
• - 56% of active consumers use open banking for payments, versus 25% of active small businesses, according to the [Open Banking Impact Report](https://www.openbanking.org.uk/wp-content/uploads/Impact-report-6-march-2024.pdf)Open Banking Impact Report
• - Enterprise use cases are expanding quickly as organizations embed open banking into core workflows

**API call volume and performance**

As adoption scales, global performance benchmarks are starting to take shape:

• - Average response time: under 300 ms
• - Uptime expectations: 99.95% or higher
• - Peak capacity: 10,000+ requests per second
• - Error rates: below 0.1%

**End of screen scraping**

Sunsetting screen scraping marks a major milestone for financial security. Customers no longer need to share their banking credentials with third parties. Instead, APIs provide controlled, permission-based access that is fully traceable and auditable.

**The key security improvements include:**

• - Token-based authentication that eliminates password sharing
• - Fine-grained permission controls
• - Time-bound access windows
• - Immediate consent revocation
• - Comprehensive audit trails

Regulators around the world are reinforcing this shift. The CFPB’s Section 1033 rule (targeted for October 2024 implementation) and the EU’s proposed PSD3 framework both move to prohibit credential sharing.

**Mandatory verification requirements**

The Council’s negotiating [mandate](https://www.europarl.europa.eu/legislative-train/theme-an-economy-that-works-for-people/file-revision-of-eu-rules-on-payment-services)mandate [](https://www.europarl.europa.eu/legislative-train/theme-an-economy-that-works-for-people/file-revision-of-eu-rules-on-payment-services)strengthens fraud prevention by expanding the scope to include electronic communications service providers.

**Verification of Payee (VoP) systems enable:**

• - Real-time name checks before a payment is sent
• - Cross-border verification capabilities
• - Fewer misdirected payments
• - A stronger foundation for liability frameworks

**Enhanced authentication may also include:**

• - Behavioral biometrics to detect unusual activity
• - Device fingerprinting and geolocation signals
• - Risk-based authentication that adapts to emerging threats
• - Continuous session monitoring

**Liability and reimbursement**

Regulatory frameworks are reshaping how liability is handled when some fraudulent activities occur, with a stronger emphasis on consumer protection.

**Proposed European approach**[](https://www.europarl.europa.eu/legislative-train/theme-an-economy-that-works-for-people/file-revision-of-eu-rules-on-payment-services)

• - [Consumers should not be placed at a disadvantage due to fraudulent activity](https://www.europarl.europa.eu/legislative-train/theme-an-economy-that-works-for-people/file-revision-of-eu-rules-on-payment-services)Consumers should not be placed at a disadvantage due to fraudulent activity
• - Shared responsibility between banks and third-party providers (TPPs)
• - Clear, enforceable consumer protection standards

**UK model:**

• - Mandatory reimbursement for Authorized Push Payment (APP) scams
• - Shared liability between sending and receiving banks
• - Investigation timelines as short as 48 hours
• - Consumer protection, unless gross negligence is proven

**Where the industry is headed**

Many countries are moving beyond open banking toward broader open finance frameworks. This next phase applies the same data-sharing principles across the entire financial ecosystem, not just bank accounts.

The scope is expanding to cover insurance policies and claims, investment portfolios and performance, pension accounts and projections, mortgage and loan data, and even cryptocurrency holdings. In the EU, the proposed **Financial Data Access (FIDA)** regulation aims to extend these principles across all financial services.

This broader access opens the door to more advanced use cases, including truly holistic financial management platforms, AI advisors to operate on complete financial pictures, seamless product switching across providers, and more comprehensive risk assessment models.

**The rise of the premium API economy**

As fintech business models mature, the focus is shifting from basic data access to higher-value services built on top of open finance APIs. Many premium offerings are emerging that go well beyond raw connectivity.

These services include advanced data analytics, predictive financial modeling, real-time fraud scoring, digital identity verification, and forward-looking cash-flow forecasting. At the same time, monetization models are evolving. Providers are experimenting with usage-based pricing per API call, subscription tiers for enhanced data access, value-based pricing tied to insights delivered, and revenue sharing on completed transactions.

**Cross-border interoperability: the next frontier**

International data sharing is becoming one of the biggest opportunities and challenges for open finance. Expanding across borders introduces real complexity, from aligning data standards globally to navigating regulatory differences between jurisdictions. The most prominent practical hurdles –  currency conversion, time zone handling, and language localization – also come into play.

To address these challenges, the industry has started coalescing around emerging solutions. These include greater cooperation on global standards, bilateral data-sharing agreements between regions, technical “bridges” that connect otherwise incompatible systems, and shared security frameworks that establish a common baseline for trust across markets.

Let's explore what implementation might look like for financial institutions, fintechs, and enterprises.

Successfully preparing for open banking and the broader shift to open finance, requires a phased, practical approach. Those organizations that move deliberately tend to reduce risk while accelerating time to value.

• - **Immediate priorities (0 to 3 months)** should be building a clear foundation. Start with a gap analysis against applicable regulations, assess whether your current technology stack can support API-driven models, evaluate API management platforms, and align internal stakeholders across technology, compliance, and business teams.
• - **Short-term goals (3 to 9 months)** center on implementation. This typically includes deploying [API gateway](https://konghq.com/products/kong-gateway)API gateway infrastructure, launching a [developer portal](https://konghq.com/products/kong-konnect/features/developer-portal)developer portal to support external partners, implementing modern security frameworks, and initiating structured API testing.
• - **Medium-term objectives (9 to 18 months)** shift toward scale and operational maturity. Financial institutions should aim to launch a full API suite, onboard third-party partners, optimize performance metrics, and secure any required compliance certifications.

**Core technology capabilities**

A resilient open banking strategy depends on several foundational components. An API gateway enables centralized traffic management and secure, scalable integrations. Strong identity management — typically built on OAuth and OIDC with support for FAPI — helps protect sensitive financial data. Data transformation tools are often necessary to connect legacy systems with modern APIs, while real-time monitoring ensures reliability and performance. Finally, a well-designed developer portal provides the self-service documentation and tooling partners need to integrate quickly and securely.

Entering the open banking ecosystem requires more than technical readiness; it calls for a thought-through strategy that balances compliance, partnerships, and innovation. [API security and management in the fintech industry](https://konghq.com/blog/enterprise/api-security-management-fintech)API security and management in the fintech industry are crucial.

• - **A strong market entry strategy** starts with understanding regulatory readiness across regions, since requirements can vary widely. Fintechs should identify any necessary licenses early, embed compliance directly into product design rather than treating it as an afterthought, and establish clear data governance practices to support responsible growth.
• - **Partnership strategy** is equally important. Some fintechs choose to integrate directly with banks to maintain greater control, while others accelerate time to market by working through aggregator platforms. White-label solutions can provide faster distribution, and consortium participation may open the door to shared infrastructure and industry collaboration.
• - **Innovation remains the primary differentiator.** The biggest opportunities often lie in underserved or overlooked use cases. Fintechs that combine multiple data sources, develop solutions tailored to specific industries, and deliver exceptional user experiences are more likely to stand out in an increasingly competitive landscape.
• - **Accreditation is a critical milestone.** Most fintechs will need to register with the appropriate regulatory bodies, complete technical certifications, implement robust security controls, and formalize operational procedures. Maintaining ongoing compliance is essential for sustaining trust and long-term participation in the ecosystem.

As open banking adoption skyrockets, enterprises have an opportunity to streamline financial operations, improve decision-making, and unlock new revenue streams. Prioritizing use cases that balance complexity with measurable business impact helps achieve success faster.

**Enterprise open banking use case prioritization**

**Implementation best practices**

Start small and scale thoughtfully. Pilot programs help validate assumptions before broader rollout, while focusing on high-value, straightforward use cases builds early momentum. Over time, organizations should develop internal expertise, establish clear data governance policies, and create feedback loops that support continuous improvement.

**Building a risk management foundation**

A structured risk framework is essential for sustainable adoption. This typically includes strong data security controls, thorough vendor risk assessments, business continuity planning, ongoing regulatory compliance monitoring, and clearly defined performance standards.

**A practical 12-month readiness checklist**

By the end of the first year, many organizations aim to have a modern security posture in place—such as implementing the FAPI 2.0 profile and operationalizing a Pushed Authorization Requests (PAR) endpoint. Payment verification measures, such as VoP or CoP checks, should be integrated, fraud reimbursement processes should be documented, and a developer portal with a live sandbox should be available for partners.

Operational maturity should also include active SLA monitoring, completed security audits, streamlined partner onboarding, validated performance benchmarks, and any required compliance certifications.

Open banking has evolved from a regulatory experiment into critical financial infrastructure. With roughly 10 million users in the UK alone, which is about 15% of the population, the scale now speaks for itself.

The data tells a clear story of transformation. Billions of API calls are driving billions in economic value. FAPI 2.0 is helping standardize security across markets, PSD3 and PSR proposals are reinforcing fraud protections, and Section 1033 is fueling U.S. momentum despite ongoing legal challenges.

**What stakeholders should do next?**

• - **Banks** need to think beyond compliance and focus on innovation. That means investing in resilient API platforms, forming meaningful partnerships, and evolving toward platform-based business models that extend their reach beyond traditional banking.
• - **Fintechs** should stay grounded in real customer problems while building trust through strong security practices. Long-term success will depend on creating network effects and differentiating on experience and value, not only features.
• - **Regulators** face the delicate task of balancing innovation with consumer protection. Encouraging fair competition, supporting cross-border collaboration, and maintaining technology neutrality will be key to sustaining ecosystem growth.

**The path forward (from 2024 to 2030)**

• - **Near term (2024–2025):** Expect continued consolidation around global standards, steady user adoption, greater normalization of premium API services, and the early expansion of cross-border use cases.
• - **Medium term (2026–2027):** Open finance frameworks are likely to become operational, AI-driven services will leverage more comprehensive datasets, embedded finance should move further into the mainstream, and regulatory harmonization will gear up.
• - **Long term (2028–2030):** The industry may see stronger global data portability, increasingly automated financial management, continued unbundling of traditional banking services, and entirely new business models.

Open banking ultimately represents a philosophical shift in financial services. Data is becoming the foundation for innovation, enabling infrastructure that turns information into tangible value for consumers and businesses alike.

This transformation is already measurable in API traffic, market growth, and changing customer expectations. The real question is no longer whether organizations should participate, but how quickly they can position themselves to compete.

The winners won’t necessarily be the biggest or the oldest. They’ll be the ones that stay open, move fast, and remain relentlessly focused on customer needs.

Welcome to the future of finance — now more open than ever.

*Ready to build your open banking infrastructure? Discover how *[*Kong Gateway*](https://konghq.com/solutions/api-gateway)*Kong Gateway** powers secure, scalable financial services.*

**What is Open Banking?**

Open Banking is a financial framework that allows banks and third-party providers to securely share banking data through APIs, giving consumers more control over their financial information. This open access fosters innovation, as fintech companies can develop new products and services built on real-time financial data.

**How do Open Banking APIs work?**

Open Banking APIs provide standard interfaces for securely sharing financial data, such as bank account transactions, balances, and payment information. With customer authorization, these APIs enable third-party services to access and process financial data, fueling innovative solutions like budgeting apps, payment solutions, and investment platforms.

**Why is PSD2 significant for Open Banking?**

PSD2 (the Second Payment Services Directive) is a major European regulation mandating that banks safely share customer data with authorized third-party providers via standardized APIs. This directive accelerated Open Banking across Europe, sparking a wave of fintech innovation and expanding consumer choice by creating a more level playing field for financial institutions.

**What are the main benefits of Open Banking for consumers?**

Open Banking helps consumers quickly compare banking services, access personalized financial products and manage their finances more effectively. Streamlined account-switching, faster payment processes, and personalized budgeting tools are frequent advantages, making it easier for customers to find better interest rates, reduce fees, and receive tailored financial advice.

**How does Banking as a Service (BaaS) differ from Open Banking?**

Although both rely on APIs, BaaS focuses on banks providing their core banking services (like payment processing or loan issuance) to third parties, letting them embed those services into their own products. Open Banking, on the other hand, centers on sharing financial data with authorized third parties. Essentially, BaaS offers banking functions, while Open Banking offers data access.

**What security measures protect customer data in Open Banking?**

Open Banking relies heavily on secure protocols such as OAuth 2.0, TLS encryption, and strong customer authentication. Banks and fintech providers use multi-factor authentication, tokenization, and real-time fraud detection systems, ensuring financial data is encrypted before and during transfer, and access is granted only with explicit user permission.

**Are there Open Banking regulations in the United States?**

Yes. While the U.S. lacks a single, centralized Open Banking mandate like PSD2 in Europe, regulations proposed by the Consumer Financial Protection Bureau (CFPB) emphasize data portability and give consumers more control over their financial data. Voluntary guidelines and interagency collaboration help shape how Open Banking evolves across the country.

**How do Payment APIs help businesses under Open Banking?**

Payment APIs facilitate direct account-to-account transfers, often saving on processing fees charged by traditional methods like credit cards. By integrating real-time, secure payment capabilities, businesses can boost conversion rates, lower fraud risk, reduce chargebacks, and often receive instant settlement of funds.

**What is the role of fintech startups in Open Banking?**

Fintech startups leverage secure Open Banking APIs to build consumer-facing apps and services that deliver personalized budgeting, faster payments, and advanced financial insights. By accessing real-time banking data, these companies can rapidly develop and iterate new solutions that challenge traditional banking norms and enrich the financial ecosystem.

**How do global regulations impact Open Banking implementation?**

Different regions adopt various regulatory models—Europe uses PSD2, Australia has the Consumer Data Right (CDR), and the U.S. follows a more decentralized approach. Each framework addresses security, data privacy, and customer empowerment in its own way, influencing how quickly new banking solutions can be launched and integrated.

**Which standards support security and interoperability in Open Banking?**

Standards such as the Financial-grade API [(FAPI) from the OpenID Foundation](https://openid.net/wg/fapi/)(FAPI) from the OpenID Foundation and the Berlin Group's NextGenPSD2 framework define secure authentication, authorization, and data exchange processes. These standards help ensure consistency and reliability for banks, fintechs, and consumers, promoting widespread adoption of Open Banking solutions.

**What does the future hold for Open Banking?**

Open Banking is expanding into broader "Open Finance," integrating services like insurance, investments, and lending under a unified digital infrastructure. Emerging technologies, including AI and blockchain, will enable more personalized products and reduce friction in accessing financial services. As consumer trust and regulatory frameworks mature, collaboration between traditional banks and fintechs will continue driving new business models and enhanced user experiences.