A few years ago, a bank executive bringing up open banking usually meant one thing: compliance. First, someone would mention PSD2, and then someone else would bring up a looming regulatory deadline. As a result, the room would treat the entire topic as a cost of doing business rather than a source of growth.
In fact, that conversation has changed. In our advisory work with banks, lenders, payment companies, and startups, open banking now comes up as a primary growth lever. Specifically, clients ask us how to build products on top of it, how competitors are monetizing it, and how it will reshape their business models over the next few years.
Why this shift is happening now
This did not happen because regulation suddenly became exciting. It happened because open banking quietly became infrastructure. Previously, bank data and bank payment rails were reached through screen scraping and manual statements. Instead, they can now be reached through a standard API. As a result, that single change made an entire layer of new financial products possible.
For example, lending decisions that used to take days can now run in minutes. Similarly, budgeting apps that once asked users to type in balances by hand can now pull real account data automatically. Likewise, small business accounting software can reconcile a bank feed the moment a transaction clears. None of this required a new law. It required an API.
This article walks through six of the clearest ways open banking is reshaping fintech products and business models today. It also covers what we tell clients when they ask how to respond. Instead, we leave out the jargon that tends to clutter this topic, and focus on what is measurable and what is actually working.
What open banking means in practice today
Open banking, in simple terms, is a framework that lets a bank customer share their account information or authorize payments through a secure API. Throughout, the customer stays in control. Meanwhile, the bank still holds the account and the money. In practice, a third party, often a fintech app or a merchant, gets a narrow, permissioned window into the data or payment rail it needs to do its job.
What has changed over the past couple of years is scale. Regulatory frameworks that started in the United Kingdom and the European Union under PSD2 have now been adopted, in some form, in more than seventy countries. For example, in the UK alone, open banking connections passed fifteen million active users by mid 2025, close to one in three adults. At the same time, the infrastructure was processing roughly two billion API calls a month.
Payment initiation lets a customer pay directly from their bank account instead of using a card. It now accounts for more than half of all open banking activity in the UK. By comparison, five years earlier, that figure was closer to a quarter. Globally, market size estimates put open banking at close to forty billion dollars in 2025. Looking ahead, projections put it in the range of ninety billion dollars by the end of the decade.
However, those numbers matter less as headlines and more as a signal. Instead, open banking stopped being a pilot program. In short, it became a channel that fintechs, banks, and non financial brands now build real products on top of.
Six ways open banking APIs are reshaping the fintech playbook
1. Payment initiation is quietly replacing card rails for a growing set of transactions
The most immediate business impact of open banking has been on payments. For instance, a retailer or a biller can trigger a payment directly from a customer’s bank account through an API. As a result, this skips several layers of card processing, interchange fees, and settlement delay. For merchants with thin margins, that difference is not trivial. For example, we have advised clients in ecommerce, utilities, and government payment collection who shifted a portion of transactions to bank to bank payment initiation. In practice, the result was lower processing costs and settlement that dropped from days to hours.
2. Banking as a service and embedded finance are becoming the default way non banks offer financial products
Open banking APIs are the plumbing behind embedded finance. For instance, a ride share app can offer a debit card. Similarly, a retailer can offer a buy now pay later option. Likewise, a payroll platform can offer earned wage access. Notably, none of them need to become a licensed bank to do it. Instead, the financial product gets built into the moment a customer already needs it, rather than sending that customer off to open a separate account elsewhere. This is the business model shift getting the most attention right now. Overall, it turns any company with a large user base and a checkout flow into a potential financial services distributor.
3. Underwriting and credit decisions are moving from static reports to real time cash flow data
Traditional credit scoring relies heavily on historical bureau data. In practice, that data can be slow to update, and it rarely captures a person’s actual cash position today. Instead, open banking changes that by letting a lender see real, consented transaction history directly from a bank account. As a result, lenders can assess income stability, spending patterns, and existing debt in minutes instead of days. In particular, this has been especially useful for thin file borrowers, gig workers, and small businesses that do not fit neatly into legacy credit models. Indeed, it is one of the clearest examples of open banking creating a product that genuinely did not exist in this form before.
4. Personal finance and money management tools are shifting from static dashboards to active advice
Early personal finance apps mostly displayed information. A pie chart of spending. A list of transactions. A net worth number. With reliable API access to multiple accounts, these tools now act more like an ongoing advisor. For example, they flag a subscription that quietly increased in price. Also, they warn that a bill is due before a paycheck lands. In some cases, the app automatically moves small amounts into savings when spending is lower than usual. That data was technically available before to a motivated user willing to log into five different banking apps. Instead, open banking made it available automatically, and that automation is what turned a nice to have feature into something people actually keep using.
5. Small business accounting and cash flow tools are automating work that used to require a bookkeeper’s afternoon
For small business owners, the hard part of running a business has rarely been the big strategic calls. Instead, it has been reconciling invoices against bank statements, chasing late payments, and figuring out whether there is enough cash on hand to make payroll. As a result, open banking connections let accounting platforms pull live transaction feeds directly from business accounts. Then they match those feeds automatically against outstanding invoices and surface a current cash flow picture instead of one that is weeks stale. Indeed, in our work with small business lenders and accounting providers, this category has produced some of the most durable retention numbers we have seen. Once an owner trusts a live cash flow view, going back to manual reconciliation is a hard sell.
6. Open finance is extending the same model into insurance, pensions, and investments
The sixth shift is the one likely to matter most over the next several years. As a result, the same permissioned data sharing model that started with checking and savings accounts is expanding into insurance policies, pension pots, mortgages, and investment accounts. This broader move is usually called open finance. For example, a person switching insurers can share their claims history automatically instead of digging through old paperwork. Likewise, someone consolidating retirement accounts can see every pension pot they have ever held in one place. This is still an earlier stage than payments or lending. Even so, regulators in the UK and parts of the EU are actively building the next phase of the framework. Therefore, it is worth watching if your business sits anywhere near these categories.
The new business models this makes possible
Beyond the six product shifts above, open banking is enabling new business models too. In fact, many of these were not viable when account access required manual processes or expensive bank by bank integrations.
Data driven underwriting as a standalone service
A number of companies now exist purely to turn consented open banking data into a risk score or affordability check they sell to lenders. Instead, they do not lend money themselves. In other words, their product is the data pipeline and the analytics layer sitting on top of it.
Aggregator and orchestration platforms
Rather than every fintech building its own direct connection to every bank, a layer of infrastructure providers now handles that technical relationship at scale. As a result, they expose a single, simplified API to the fintechs building on top of them. This is a genuine platform business model. In other words, it monetizes the connectivity itself, not any single financial product.
Subscription based financial management
A number of consumer finance apps have moved away from advertising or lead generation revenue and toward direct subscription fees. Indeed, the depth of insight open banking data provides is valuable enough that users will pay for it directly. This is particularly true for proactive alerts, negotiation services, and tailored recommendations.
Banks selling their own API access as a product
Banks themselves are increasingly treating their APIs as a product line rather than a regulatory obligation. For example, a number now offer premium, higher performance API tiers to fintech partners. As a result, that makes them API vendors alongside being deposit takers, which is a real shift in how a bank thinks about its own technology stack.
What we tell clients to watch
In practice, none of this is without friction, and part of our job is making sure clients see the risks as clearly as the opportunity.
Security and consent management
This remains the top concern for both banks and end users. A permissioned model only works if customers understand what they are sharing and can revoke it easily. In addition, third parties receiving that data must be held to a genuinely high security bar. Otherwise, a high profile breach, or a dark pattern around consent, could slow adoption industry wide, not just for the company involved.
Uneven interoperability across markets
A framework built for the UK does not automatically translate to how open banking works in Brazil, Australia, or the United States. Instead, adoption in those markets has been more market driven than regulation driven. As a result, a business expanding across borders should treat open banking as several distinct technical and regulatory environments, not one global standard.
Monetization discipline
It is easy for a fintech to get access to rich account data and build an impressive dashboard. However, it is much harder to turn that into a business with durable revenue rather than simply engagement. Indeed, we see this gap often: a strong product with an unclear path to getting paid for it.
Incumbency advantages have not disappeared
Bigger banks have more resources to invest in high quality APIs, faster response times, and broader product coverage. As a result, in several markets, they are starting to out compete smaller open banking specialists on the very infrastructure those specialists helped popularize. Even so, who ends up ahead in this particular contest is still an open question.
Where this leaves strategy and product teams
For financial institutions
Open banking APIs are no longer just a compliance line item to satisfy a regulator. Instead, they are a distribution channel, a data asset, and in some cases a revenue line on their own. Meanwhile, a bank that treats its API as an afterthought is handing distribution to whichever fintech builds the better product on top of it. In contrast, a bank that invests in good developer experience, reliable uptime, and fair commercial terms becomes the infrastructure other companies build on. Overall, that is a durable place to sit in any industry.
For fintechs and non financial brands
The opportunity is to think about the moment a customer already needs a financial service. Instead, that beats pulling the customer into a separate financial app. The businesses that have done this well generally started narrow, with one useful financial feature tied tightly to their core product. In fact, few of them tried to become a full service bank overnight. We usually advise clients to pick that one feature based on where customers already feel the most friction. For example, that might be a slow checkout, a clunky refund process, or a payroll cycle that leaves workers waiting. In short, it should not be chosen based on whichever financial product is generating the most press coverage that quarter.
For everyone building in this space
Six shifts are covered above: payments, embedded finance, real time underwriting, active personal finance tools, small business cash flow automation, and the early expansion into open finance. These are where the next round of genuinely new financial products is most likely to appear. In short, open banking built the plumbing. Even so, the businesses that win from here will build the most useful thing on top of it, price it sensibly, and earn enough customer trust to keep the connection open.
Frequently asked questions
What is open banking in simple terms?
Open banking is a system that lets a bank customer securely share account information or authorize payments directly from their bank. Instead, it uses an API rather than sharing login credentials. For more detail, a clear, plain language explanation is available from Stripe.
Is open banking safe to use?
Open banking relies on regulated, permissioned access rather than password sharing. In addition, customers can revoke access at any time, and providers must meet strict security and authentication standards. For more detail on the safeguards involved, see Open Banking’s safety explainer and Stripe’s security overview.
How is open banking different from screen scraping?
Screen scraping requires a user to hand over their actual bank login credentials to a third party app. Instead, open banking replaces that with a secure, standardized API connection and a formal consent process, so the bank knows exactly what is being shared and with whom. For more depth, the F5 glossary entry on open banking covers this distinction.
Is open banking only for large fintech companies?
No. Infrastructure providers now handle the technical connections to thousands of banks. As a result, smaller companies, and even individual developers, can build on open banking without negotiating direct integrations with every bank themselves. For further reading, common questions along these lines are collected in Open Banking’s official FAQ.
What is the difference between open banking and open finance?
Open banking generally refers to permissioned data sharing and payment initiation tied to checking and savings accounts. Meanwhile, open finance extends that model to a wider range of products, including insurance, pensions, mortgages, and investments. For a useful side by side explanation of related terms, including embedded finance, see Meniga’s guide.
Will open banking replace traditional banking?
Not in the way that phrase suggests. Open banking does not remove banks from the picture. Instead, it changes how customers and third parties interact with the accounts that banks still hold. Banks remain the regulated custodians of deposits, while fintechs and other companies build products around that data with the customer’s permission.
References
-
Stripe. “What Is It and How Does It Work?“
-
Open Banking Limited. “Behind the Numbers: APIs and the Infrastructure of Financial Innovation“
-
SQ Magazine. “Adoption Statistics: Industry Leaders“
-
Fabrick. “Industry Trends and Future Outlook“
-
Open Banking Limited. “Why the Technology Is Safe“
-
Stripe. “Safety and Security Overview“
-
Open Banking Limited. “Official Frequently Asked Questions“
-
Meniga. “Embedded Finance vs Direct API Data: A Comparison Guide“