Open Banking is a UK regulatory initiative that allows you to securely share your financial data — with your consent — between your bank and authorised third-party providers, such as budgeting apps, comparison services, and alternative lenders. Introduced in 2018, it has quietly changed how many people manage their money, often without realising the technology behind it.
How does Open Banking work?
Open Banking works through secure, regulated technology called APIs (Application Programming Interfaces), which allow different financial systems to communicate with each other safely. When you use an Open Banking-connected app, you grant explicit permission for it to access specific information from your bank account — such as your transaction history or balance — directly from your bank, rather than the app needing your banking login details.
Crucially, Open Banking providers must be regulated by the FCA, and you can revoke access at any time. Your bank login credentials are never shared with the third-party app — access is granted through a secure authentication process directly with your bank.
What can Open Banking be used for?
Open Banking enables a wide range of services that were not previously possible or were significantly more cumbersome. Budgeting apps such as Emma, Money Dashboard and Snoop use Open Banking to pull together transactions from multiple accounts and provide a single view of your finances. Account aggregation lets you see balances from accounts at different banks in one place, without logging into each separately. Affordability checks for mortgages and loans can use Open Banking to verify your income and outgoings more accurately and quickly than traditional methods like submitting bank statements. Open Banking payments allow you to pay directly from your bank account rather than using a card, which some retailers and services now offer as a faster, lower-cost payment method.
Is Open Banking safe?
Open Banking is built on strict regulatory standards. Any provider using Open Banking must be authorised by the FCA or an equivalent EU regulator, and must comply with strong security and data protection requirements. You always control what data is shared and for how long, and consent typically needs to be renewed periodically (often every 90 days) rather than being permanent. If you are concerned about a specific provider, you can check whether they are registered on the FCA's Financial Services Register at register.fca.org.uk.
How is this different from screen scraping?
Before Open Banking, some apps used a technique called "screen scraping," where you would provide your banking login details directly to a third-party app, which would then log in on your behalf to extract data. This approach required sharing your actual credentials and was considered less secure. Open Banking replaced this with a regulated, consent-based system that never requires sharing your login details with third parties.
Should you use Open Banking apps?
Open Banking apps can be genuinely useful for getting a clearer picture of your spending across multiple accounts, automating budgeting, and speeding up applications for credit or mortgages. As with any financial service, it is worth checking that any app you use is FCA-regulated and reading what data access you are granting before connecting your accounts.