At a glance:
An Open Banking platform gives businesses a scalable and secure way to connect to multiple financial institutions, allowing them to aggregate checking account data in one place and initiate direct bank payments (A2A).
Instead of maintaining fragmented integrations and having to obtain the respective mandatory licenses, teams can rely on a single solution to launch faster, reduce technical overheads, improve risk workflows and fraud prevention, and streamline payments.
This enables use cases like account aggregation for personalized financial management, quicker, more accurate lending decisions, and automated fund transfer reconciliation.
Open Banking is a regulated framework that lets individuals and businesses securely share payment account data and initiate transactions through licensed third-party vendors, with explicit user consent.
Regulators have been working for decades to improve financial data sharing. Since the launch of the first Payment Services Directive (PSD1) in 2007, regulators have focused more and more on the power customers hold over their own information. First coined within UK regulations, Open Banking is a concept that aims to foster competition between banks and increase consumer control over their financial data.
Open Banking relies on standardized APIs (Application Programming Interfaces), a connection linking computers or software, that ensure secure communication between banks and authorized providers. In practice, this makes it possible to access data such as account balances and transaction history for use cases including account aggregation, affordability checks, fraud prevention, and reconciliation. It also enables payment initiation, with strong customer authentication applied where required.
In Europe, the Payment Services Directive (PSD2) laid the legal foundations for Open Banking. It became applicable in January 2018, requiring banks to give licensed third-party providers access to payment account data, with the user’s consent, while creating a regulated basis for new payment services to emerge.
Its broader goal was to make electronic payments safer, increase competition, and support a more integrated EU payments market. Looking ahead, the framework is being updated through PSD3 and the proposed Payment Services Regulation (PSR), which are intended to strengthen consumer protection, reduce fraud, and make implementation more consistent across the EU.
An Open Banking platform provides secure technology for accessing checking account data and initiating bank payments through APIs. These platforms, such as Powens, connect to multiple banks so users can safely share their banking information with third-party payment service providers (PSPs). The PSPs use Open Banking platforms to access capabilities like:
Open Banking platforms help businesses build and scale financial products without creating separate integrations for every bank. Instead, they provide a unified layer for accessing account information services (AIS) and payment initiation services (PIS) under PSD2 regulations in Europe.
The term Open Banking API can refer to two things: the mandatory, “raw” APIs built by a bank to share data and initiate payments, or the “unified” API offered by a service provider. While banks provide the initial entry point, an Open Banking platform acts as a hub that connects to thousands of these individual bank APIs and translates them into a single, standardized connection.
Most businesses choose a platform for this very reason because it handles complex technical maintenance and provides the necessary AISP/PISP regulatory licenses. This allows companies to access the entire banking ecosystem through one provider-side API without the massive cost of building and regulating their own infrastructure.
Open Banking platforms focus on PSD2-regulated bank data and payments (AIS/PIS), connecting current accounts via standardized APIs.
Taking this one step further, Open Finance platforms extend the scope to broader financial data (such as investments, insurance, and pensions) to create a more comprehensive ecosystem. It’s important to note that these platforms (and Open Finance as a whole) are far less regulated than Open Banking solutions. Moreover, due to a lack of mandatory and standardized APIs, many Open Finance platforms thus use scraping technology to access and provide this type of data instead.
Firms leverage established, compliant Open Banking platforms to build and roll out financial products faster and more cost-effectively. The technology can eliminate fragmented bank integrations and streamline connectivity to financial institutions to achieve benefits like:
Implementing an Open Banking platform gives your business a unified interface to access and manage high-quality financial data, while unlocking new revenue opportunities along the way.
👉 Explore more use cases of Open Banking here.
Three key players are connected through an Open Banking platform:
Platforms offer unified integration across banks, reducing technical overhead. They add:
Under PSD2, Open Banking services in Europe must operate within a secure, compliant, and permission-based framework. Access to financial data or payment initiation can only be granted with the user’s explicit consent, ensuring full control over what is shared and with whom.
Additionally, Strong Customer Authentication (SCA) is required for most interactions, adding an extra layer of protection through multi-factor verification.
For multi-factor SCA, a user must provide two of the three following elements:
However, the level of trust and security can depend on the quality of the provider and how the solution is implemented. Businesses should evaluate platforms based on their compliance posture and overall security architecture. Critical security considerations when choosing a vendor include:
Selecting the right partner for your Open Banking platform requires a thorough analysis of what each vendor has to offer. Below is a checklist of the most crucial features to look for:
Connectivity tools alone are not enough to set yourself apart from competitors. Worthwhile Open Banking platform solutions must provide you with the critical infrastructure you need to build high-performing products at scale, powered by reliable, real-time financial data.
Teaming up with a reliable Open Banking partner like Powens gives you the capabilities to:
At Powens, we go beyond Open Banking to give businesses operating in France, Spain, and across Europe a full-fledged Open Finance and Embedded Payments platform.
Ready to turn Open Banking into a business advantage? Get in touch to schedule a demo and see how Powens can power your next generation of financial products.