What open banking is
Open banking is a regulated way for you to share payment-account data or to initiate payments through authorised third parties, instead of handing over bank login details to an unregulated app.
In the UK it grew from Competition and Markets Authority remedies and is overseen with FCA authorisation for account-information and payment-initiation service providers. Confirm a firm on the Financial Services Register.
Account information and payment initiation
Account information services (AIS) can read balances and transactions with your consent, often to support affordability or eligibility checks.
Payment initiation services (PIS) can start a payment from your account with your consent, without the third party storing your banking password.
Consent and permissions
Access should be for a stated purpose and period. You can usually revoke access through the third party or your bank’s connected-app controls. Sharing data with one lender does not give every lender a permanent feed.
Use in credit and affordability journeys
Some lenders use open banking to see recent income and spending instead of, or as well as, paper statements. That can speed a decision. It is not a guarantee of acceptance and it does not replace the need for the loan to be affordable.