Developed in 2016 in the UK, the first known Open Banking project was initiated through a directive from the local regulatory authority, requiring banks to share clients’ financial data with competitors and other authorized providers. With the creation of the Open Banking Implementation Entity (OBIE) by the Competition and Markets Authority (CMA), this disruptive idea took shape but was only fully implemented in 2018, two years later. Since then, it has sparked global discussions on financial autonomy, data privacy, and security. Almost a decade later, over 60 economies worldwide have adopted similar solutions or are developing their own programs.
Despite initial resistance from traditional banks, Open Banking has proven to be an empowering tool for consumers, making credit scoring more transparent and effective—particularly in developing countries, where access to banking services has long been a privilege of the few. The concept behind Open Banking, which later evolved into the broader Open Finance model, revolves around secure data sharing: customers, at their request and with their approval, can share their financial data with third-party providers. This enhances transparency between financial institutions and ensures that users receive more competitive rates, better loan offers, and tailored financial services.
Through APIs, authorized third-party providers can access this data—but only when users explicitly consent. This consent is typically granted via digital banking apps or dedicated platforms, where customers can select specific accounts and decide exactly what data to share. Multi-factor authentication is often required for additional security. This system gives individuals greater control over their financial information, opening doors to personalized financial products, better credit conditions, and more competitive investment opportunities.
The leaders of Open Finance
The UK’s pioneering initiative served as a reference for the European Union, which adopted PSD2 (Second Payment Services Directive) in 2018, mandating that banks provide account data access through APIs. This regulation expanded the concept of Open Banking across Europe and later paved the way for the broader Open Finance ecosystem. Initially, Open Banking’s popularity was fueled by the need to boost competition in the banking sector and improve financial services.
Europe is often referred to as the “cradle of Open Banking” because PSD2 and the UK’s Open Banking Standard laid its foundation. By September 2019, open banking regulations were already in effect across the EU, designed to drive competition and innovation. The UK led the charge, enforcing data-sharing requirements among its biggest banks a year earlier. Today, the UK and Sweden are leading the pack, according to Mastercard’s Open Banking Readiness Index. Australia is also advancing rapidly with its Consumer Data Right Act (CDR), which initially applied to banks but is now expanding to energy and telecommunications sectors.
Against the odds, Brazil has emerged as one of the world’s leading Open Finance success stories. The country adopted a regulated and phased approach under the Central Bank of Brazil, taking inspiration from the UK and the EU—but pushing even further. It created one of the most comprehensive Open Finance ecosystems globally, integrating not just banking data but also insurance, investments, pensions, and even instant payments via PIX (a real-time payment system similar to Spain’s Bizum).
Aspiring Nations
Meanwhile, countries like India, Japan, Singapore, and South Korea do not yet have formal Open Banking regulations. In Nigeria, the Central Bank has tried to introduce Open Banking, aiming to transform the country’s financial sector. A task force has been working on open API standards, which, once approved, could be implemented as early as 2022.
In contrast, the United States has taken a market-driven approach, meaning that Open Banking products and services are developed by private companies rather than government mandates. So far, there have been no major regulatory initiatives to standardize Open Banking at the federal level, leaving innovation largely in the hands of fintech and banks.
