What is Open Banking?

How we got here

Chapter 2

We’ll start from the beginning.

Way back in 2013 The Competition and Markets Authority (CMA) started a review of the UK retail banking industry and financial services sector.

It took a 3 year-long review before the CMA published a report in August 2016 that, unsurprisingly, found that the financial services industry lacks innovation and more importantly, competition. The CMA found that smaller Financial Technology (Fintech) companies and challenger banks are unable to compete in the banking market as it’s dominated by the big banks, resulting in customers missing out on the best deals.

Because of this review and to try and help stimulate competition, the CMA and the UK Government ordered the 9 largest banks in the UK (referred to as the CMA9) to create Open Banking API’s that allow the secure passing of financial data from the banks to other regulated and authorised financial services businesses. A deadline was put in place for January 13th 2018, when all of the CMA9 banks APIs had to be built.

The Competition and Markets Authority

What is the CMA? – The CMA is an independent non-ministerial department within the UK government.

What do they do? – The CMA work to promote competition for the benefit of people and small businesses both within and outside of the UK. Their aim is to ‘make markets work well for consumers, businesses and the economy’.


Why Open Banking?

Open Banking has been created to give people and small businesses the ability and choice to share their financial data securely in order to get access to better financial tools, services and products.

The situation in retail banking in the UK is not unique. Open Banking in the UK has been brought about under a European wide piece of legislation, called the ‘Second Payments Services Directive’ or PSD2 (more on that shortly). This directive is designed to ensure a better financial services market across Europe and means that strict regulations have been put in place to ensure that the CMA9 build their APIs to a specific security and technical standard.


The Second Payment Services Directive – PSD2

‘The Second Payment Services Directive’ or PSD2 is the directive implemented by the European Union. This legislation has been implemented across countries within the European Union, to improve consumer protection, make payments safer and more secure, and drive down the costs of payment services.

As a minimum under this directive, customers should be able to access and share the data that they can view through their online banking. The UK played a key role in the instigation of PSD2 and were the first country to standardise the implementation, resulting in Open Banking.   

Along with initiating an Open Banking movement throughout the European Union, PSD2 also puts in place a number of new requirements that businesses within the financial services sector need to abide by. These include acts to ensure that customers are treated fairly, that their complaints are dealt with appropriately and that the data businesses hold about people must be reported to the FCA.

Although PSD2 is implemented across the entire European Union, the United Kingdom is the first and only country to standardise the requirements that need to be met by participating banks and third-party providers like OpenWrks.

Chapter 1

Who's who?

Everything you need to know about Open Banking.

Chapter 2

How we got here

Way back in 2013 The Competition and Markets Authority (CMA) started a review of the UK retail banking industry and financial...

Chapter 3

Who are the participating banks

9 UK based banks were ordered to create Open Banking APIs. These participating banks are referred to as the CMA9.

Chapter 4

How secure is Open Banking?

Open Banking is very secure - as secure as your online banking. The Open Banking API endpoints have been built by the banks...

Chapter 5

What data will be shared?

The information that you choose to share through Open Banking will vary depending on the service that you want to receive.

Chapter 6

How do I provide or remove permissions?

Your online banking is the only place where you can control who has permission to see your bank account and for what purpose.

Chapter 7

What does AISP & PISP mean?

To be fully authorised through PSD2 to use the Open Banking APIs businesses have to be registered as either an AISP or PISP.

Chapter 8

Quickfire Open Banking FAQs

All your questions answered in our quick fire Open Banking FAQs.

Chapter 9

Open Banking jargon dictionary

Our Open Banking jargon dictionary has been put together to translate acronyms and keywords into simple terms.