Open banking is the UK system that lets an FCA-regulated provider, with your customer's explicit consent, securely read their bank account information or start a payment on their behalf through standardised bank APIs. It replaces sharing login details or paper statements, and it is the data source behind income verification, affordability checks and pay by bank.
A plain definition
Open banking is a set of rules and technology that lets you share your bank data, or let someone start a payment from your account, through a secure connection the bank provides. The customer stays in control: they approve each connection with their own bank, they can see what they have shared, and they can switch it off.
For a business, open banking is a reliable way to get bank-verified information about a person or company with their permission, and to move money account to account. Instead of asking for payslips, bank statements or a login, you ask the customer to connect their bank for a moment. The bank confirms who they are and releases exactly the data they agreed to, or carries out the payment they approved.
Two regulated activities sit underneath it: reading account information (the account information service, or AIS) and starting payments (the payment initiation service, or PIS). Most business uses are a combination of the two. We cover the difference in AIS vs PIS.
What open banking lets a business do
Three jobs cover most of what firms actually use it for:
- See verified bank data. Balances, transactions, standing orders, direct debits and account details, straight from the bank rather than from a document that could be edited.
- Verify income and affordability. From those transactions you can detect salary and other income, and work out what a person has left after their committed spending. This is the question a lender, broker or letting agent is really asking: can they afford it?
- Take a payment. A pay by bank payment moves money directly from the customer's account, with no card details, and increasingly on a recurring basis through variable recurring payments.
You can do any of these on their own, or together. A lender might verify income, assess affordability and then collect by pay by bank, all from the same connection. See income verification and open banking payments.
Who is involved
Four parties take part in any open banking interaction, and it helps to name them in plain English first:
- Your customer (the payment services user, or PSU): the person or business whose account it is, who gives consent.
- Their bank (the account servicing payment service provider, or ASPSP): the bank or building society that holds the account and exposes the APIs.
- A regulated provider (a third party provider, or TPP): the firm authorised by the FCA to read the data or start the payment.
- You: the lender, broker, accountant or agent who uses the result to make a decision or collect a payment, usually through a provider rather than by holding the licence yourself.
Credit Canary sits between the provider and your decision: it takes the raw bank data and turns it into income, affordability and payments inside your platform. See the full step-by-step flow.
What open banking is not
- It is not screen scraping. Scraping asks for a customer's login and logs in as them. Open banking never touches the login; the bank authenticates the customer directly. See open banking vs screen scraping.
- It is not a product you buy off the shelf. It is a framework. What you buy is a provider's service built on top of it.
- It is not a full credit check. It shows real money in and out of one or more accounts, not a borrowing history across the market. Most lenders use it alongside bureau data. See open banking vs credit bureau.
- It is not EU-only or UK-only. The UK has its own Standard, but comparable regimes exist elsewhere.
How open banking came about
UK open banking grew out of a 2016 competition investigation: the Competition and Markets Authority ordered the nine largest banks to open their data through a common standard, and the Payment Services Regulations 2017 set the legal basis. It went live in January 2018 and has been extended since, most recently to live commercial variable recurring payments in 2026. For the full chronology, see the history and timeline.
Is open banking free?
It is free for the customer: no one is charged to connect their account or to make a pay by bank payment. The business using open banking pays its provider, normally on volume rather than a fixed licence. What drives the cost, and how it compares with cards and bureau data, is covered in how much does open banking cost.
From the data consumer's side
The Standard is written for banks. If you are the firm using the data, the practical point is this: open banking gives you evidence, not just a declaration. A figure a customer typed into a form becomes a figure you can see landing in their account every month. That changes what you can decide and how fast. For a broker it means an application you can trust without chasing documents; for a lender it means affordability grounded in real spending; for a letting agent it means referencing a tenant in minutes. The trade-off is that you depend on the customer connecting, and on your provider's bank coverage and data quality, which is why choosing a provider matters.
How Credit Canary does it
Credit Canary provides open banking through a regulated provider and delivers the result into your decision engine or dashboard: categorised transactions, detected income, a surplus and affordability view, and pay by bank collection, alongside credit bureau and identity data. You get the decision, not a pile of raw API responses, and you do not need your own authorisation to use it.
Common questions
Is open banking the same as a bank transfer?
No. A bank transfer moves money. Open banking is the regulated framework of APIs and consent rules that lets a third party read account data or start a payment on the customer's behalf. A pay by bank transfer is one thing open banking can do, but open banking also covers reading transactions and balances.
Do you need a customer's bank login to use open banking?
No. The customer authenticates directly with their own bank and approves the request there. The provider never sees or stores the login details. That is the main security difference from screen scraping.
Is open banking only a UK thing?
No. The UK has its own standard shaped by the CMA Order and the Payment Services Regulations 2017, but similar regimes exist across the EU under PSD2 and in other markets. This guide covers the UK Standard.
Who can provide open banking services?
Only firms authorised or registered by the FCA as an account information service provider, a payment initiation service provider, or both, or an agent of one. A business can use open banking by working with such a provider rather than becoming one.
Does open banking cost the customer anything?
No. Customers are not charged to connect their account or make a pay by bank payment. The business using open banking pays its provider, usually on volume.
Related pages
Primary sources
- openbanking.org.uk, What is open banking (checked 14 Oct 2026).
- Payment Services Regulations 2017, SI 2017/752 (checked 14 Oct 2026).
- CMA Retail Banking Market Investigation Order 2017 (checked 14 Oct 2026).
Credit Canary provides open banking through fumopay limited, an FCA-authorised account information and payment initiation service provider (FRN 925689), of which Credit Canary is an agent. Underlying bank connectivity is also provided by fumopay limited. This page is an evergreen reference and is reviewed and dated; it is not regulatory, legal or financial advice.