What open banking enables
Open banking creates two fundamental capabilities. Account Information Services (AIS): a licenced app can read your account data — balances, transactions, income patterns — to provide budgeting tools, credit assessments, financial planning, or tax assistance. With your consent, a budgeting app like Emma or Snoop can aggregate all your bank accounts (including accounts at different banks) into a single view, categorise spending automatically, and identify subscriptions or inefficiencies. Payment Initiation Services (PIS): rather than paying by card (which routes through Visa/Mastercard and their fees), a third party can initiate a direct bank transfer on your behalf with a single authorisation. Open banking payments cost a fraction of card payments, which is why many merchants now offer them as a checkout option.
Impact on incumbents and new entrants
Open banking fundamentally shifts the competitive dynamics of retail banking. Incumbent banks historically competed on the stickiness of current account relationships — customers rarely switched because their financial history, direct debits, and salary links were locked in. Open banking allows customers to share that data with competing services without switching: you can use a Barclays account while having your finances managed by a fintech app that accesses it. This separates the "infrastructure layer" (payment rails, deposit holding) from the "experience layer" (customer-facing services), allowing fintechs to compete at the experience layer without being banks. In response, many banks have accelerated their own digital offerings and partnered with fintech ecosystems rather than viewing open banking purely as a threat.
“Open banking is not a product. It is a regulatory infrastructure that makes your financial data portable — and in doing so, shifts power from institutions to individuals.”
What this means for you
Open banking services are available through FCA-regulated apps and are safer than sharing bank login credentials with third parties (which you should never do). Consent is explicit, specific, and revocable at any time through your bank or the app. The most practical benefits: budgeting apps that aggregate all your accounts automatically; cheaper payment options at checkout (direct bank transfer vs card); faster credit assessments that use actual bank transaction data rather than just credit scores; and switching services that can identify better current accounts, savings rates, or energy tariffs based on your real spending patterns. The UK’s open banking infrastructure is among the most advanced in the world — take advantage of it.