Open Banking: API Connectivity, Digital Payments, and Data Sharing Transform Financial Services

Open banking is reshaping financial services by enabling customers to securely share banking information and authorize payments through regulated third-party providers. Banks, fintech companies, payment platforms, and financial-technology developers are increasingly using APIs to connect accounts, payment services, and financial applications. This shift is creating more integrated digital experiences while encouraging competition, personalization, and innovation across retail and corporate banking.

A comprehensive market assessment by  Markntel Advisor examines the Global Open Banking industry analysis across retail banking, corporate banking, capital markets, distribution channels, deployment models, and major regional markets. The study highlights payments, digital onboarding, cloud deployment, API connectivity, and government support as important forces shaping adoption, while identifying data-security concerns and API-related challenges as key barriers.

Government Support Accelerates Adoption

Regulatory initiatives have played an important role in establishing open banking frameworks. The introduction of PSD2 in Europe created requirements around secure access to payment-account information and payment initiation, helping establish the foundation for third-party financial services.

The European Banking Authority has worked extensively on API functionality, strong customer authentication, and secure communication between banks and third-party providers. Its work demonstrates the importance of standardized and reliable interfaces for creating a functioning open-banking ecosystem.

Governments and regulators in the UK, Europe, North America, Asia-Pacific, and other markets are also developing frameworks designed to encourage secure data sharing and financial innovation.

Payments Become a Major Use Case

Payments are emerging as an important application of open banking across both retail and corporate banking. Fintech companies can use account-access and payment-initiation capabilities to create alternatives to conventional card-based payment experiences.

Open banking payments can allow customers to authorize transactions directly from their bank accounts, potentially reducing checkout friction and providing merchants with additional payment options.

The UK provides a strong example of this trend. Open Banking Limited reported 31 million open banking payments in March 2025, equivalent to around 7.9% of Faster Payments. Payment volumes were growing at 70% year-on-year, demonstrating increasing consumer and business engagement.

Digital Onboarding Gains Importance

Digital onboarding is another significant area where open banking can improve customer experiences. Instead of requiring customers to manually enter extensive financial information, authorized providers can retrieve relevant account information through secure connections.

This can simplify applications for financial products, reduce repetitive data entry, and improve the accuracy of customer information.

The source study identifies the facelift of the onboarding process as a major trend. Open banking can help automate the retrieval of account details and transaction histories, allowing financial institutions and fintech platforms to develop faster and more streamlined onboarding journeys.

Cloud Deployment Supports Scalability

Cloud-based deployment is gaining momentum because it provides scalability, flexibility, and easier integration with other digital applications. Financial institutions and fintech companies can use cloud environments to manage open-banking services while connecting APIs with payment platforms, customer applications, analytics systems, and other financial infrastructure.

Hybrid models are also gaining attention because organizations can retain sensitive workloads within controlled environments while using cloud infrastructure for applications requiring greater scalability.

This flexibility is particularly valuable for financial institutions modernizing legacy infrastructure while simultaneously developing new digital services.

Europe Maintains a Strong Position

Europe has established a strong position in open banking because of regulatory development, API standardization efforts, and widespread digital-payment adoption. The source study identifies Europe as the leading regional market and highlights the UK and France for their progress in API standardization.

The European ecosystem is continuing to evolve beyond basic PSD2 requirements. The European Central Bank has previously supported work around API access schemes intended to improve integration and innovation beyond the minimum PSD2 framework.

This regulatory and technological environment provides a strong foundation for account-information services, payment initiation, and broader open-finance applications.

UK Adoption Demonstrates Market Maturity

The UK is one of the clearest examples of open banking moving from regulatory implementation toward mainstream usage. Open Banking Limited reported 13.3 million active users in March 2025, representing approximately one in five people and small businesses with online access to current accounts.

By December 2025, user connections had reached 16.5 million, while open-banking payments reached 351 million transactions during the year. API calls also increased substantially, illustrating the growing scale of the underlying infrastructure.

These developments demonstrate how open banking can become embedded within everyday financial activities rather than remaining a specialized fintech service.

API Fragmentation Remains a Challenge

Although APIs are central to open banking, fragmentation can increase implementation complexity. Different banks may use varying API standards, technical configurations, authentication processes, and performance characteristics.

The EBA has identified API fragmentation as an important challenge under PSD2, noting that third-party providers may need to invest significant resources in connecting to different account-servicing payment providers and maintaining those integrations.

Greater standardization could reduce integration costs and improve interoperability, although transitioning established systems can create additional compliance and technology expenses.

Data Security Requires Strong Controls

Open banking depends on the secure exchange of sensitive financial information, making cybersecurity and customer consent fundamental requirements.

Unauthorized access, API vulnerabilities, identity theft, and data breaches can undermine consumer confidence and create regulatory risks. Strong customer authentication and secure communication standards are therefore essential components of open-banking infrastructure.

The EBA's work on APIs under PSD2 specifically addresses secure communication and strong customer authentication, reinforcing the importance of security throughout the data-sharing process.

CBDCs Could Create New Opportunities

The source study identifies central bank digital currencies as a potential opportunity for open-banking providers. As central banks explore digital forms of national currencies, financial institutions may require new infrastructure capable of integrating digital assets with existing banking and payment systems.

Open-banking technology providers could potentially support these developments through APIs, payment connectivity, identity management, and financial-data services.

Competitive Landscape

The competitive ecosystem includes Finleap, Revolut, Tink, Salesforce, Worldline, Tata Consultancy Services, Capgemini, Oracle, Finicity, Jack Henry & Associates, Finastra, Virtusa, and Plaid, among others.

Competition increasingly centers on API capabilities, payment initiation, account-information services, cloud infrastructure, security, data analytics, onboarding, and integration flexibility.

Outlook for Open Banking

Open banking is expected to continue evolving as financial institutions modernize infrastructure and consumers become increasingly comfortable with secure data sharing and account-based payments. API connectivity, digital onboarding, payment initiation, cloud deployment, open finance, and stronger security frameworks will remain central to future development.

As the ecosystem matures, the emphasis is likely to shift from simply enabling access to bank data toward delivering more integrated financial experiences. Greater interoperability, standardized APIs, real-time payments, and customer-controlled data sharing could further expand open banking's role across retail banking, corporate finance, payments, and emerging financial services.