What is open banking?
Open banking lets you give a regulated provider secure, read-only access to your bank account data, or permission to initiate payments, through an API rather than by sharing your login details. Access is consent-based, time-limited and can be withdrawn at any time.
It came out of the Competition and Markets Authority's 2016 retail banking order and the second Payment Services Directive. Providers must be authorised by the FCA as account information or payment initiation service providers, and they appear on the Financial Services Register.
It is materially safer than screen scraping, the practice it replaced, where a service asked for your actual banking credentials. With open banking your credentials are never shared: authentication happens with your bank, and the provider receives a revocable token.
Its limit is scope. Open banking covers payment accounts — current accounts and some cards. Pensions, investments, mortgages and insurance sit outside it, which is the gap open finance is meant to close.