Open banking is a reform obligating banks to permit customers to share their transaction data with third parties through application programming interfaces (APIs). Last year, the EU enacted the PSD2 regulation requiring banks in the European Union to comply with the open banking reform. Other countries, such as the UK and Australia, are already involved in advanced preparations for open banking.
Open banking is expected to open up financial services to third party providers, thereby lowering fees and expanding offerings for customers. Traditional banks will have to adopt new technologies and be increasingly innovative to remain competitive.