Innovations in Open Banking

What is Open Banking, and why is it a global trend in the financial sector?

Open Banking is a modern approach to the financial sector that allows banks to 'open up' some of their data and services to other companies, with the customer's consent. This is done through special digital channels - called APIs (Application Programming Interfaces) - that ensure the secure and controlled transfer of information.

Imagine viewing your accounts at different banks, paying utility bills conveniently, getting better credit offers or automatically tracking your spending through a mobile application - this is exactly what Open Banking makes possible.

Open Banking is already being actively implemented in the European Union, the UK, South East Asia, Australia and South America. In North America and Africa, the concept is being actively developed or launched. Ukraine is also on this list. In the United States, Open Banking is actively developing as a market initiative, and the regulatory framework is still evolving.

Why has Open Banking become a global trend?

• Better customer service - competition makes financial services more convenient, cheaper and more efficient. 
• New opportunities - FinTech companies create innovative products that didn't exist before. 
• Financial transparency and control - the user decides to whom and what of their financial data is shown. 
• Security - all data exchanges are regulated by the government and comply with international standards. 

So, Open Banking is a step towards a more open, transparent and customer-oriented financial system, where the main value is convenience and security for the end user.

How Open Banking is changing traditional banking services

With Open Banking, traditional banks are no longer the only source of financial services for customers. Customers can use different applications to manage their finances, compare loan terms, automate payments, identify users and receive personalised recommendations. API management for banks opens up new opportunities for integration with FinTech ecosystems. 

Key benefits for banks, FinTech companies and customers

For banks:

Open Banking opens up new opportunities for banks. They can monetise access to their data, for example by providing third-party services with access to APIs on a fee or partnership basis. This allows them to create new revenue streams without changing their core business model. banks can also attract more customers by offering financial innovations in collaboration with FinTech companies, such as expense analysis, quick loans or automatic budgeting.

For FinTech companies:

The FinTech sector is given a real space for creativity. Open access to banking APIs allows faster development and launch of new services without spending years on complex integrations. This means that start-ups can launch a convenient mobile app or payment service in just a few weeks that solves a specific user need, such as how to save or invest money. 

For customers:

The main benefit is convenience and control. Now the user decides who and what financial data to share. This significantly increases trust in the services. In addition, Open Banking allows you to: 

• see all your accounts across different banks in one place; 
• get personalised financial management advice; 
• use new convenient applications and services designed specifically for you.

Key innovations in the field of Open Banking

API economy and banking APIs

Open Banking is based on the so-called API economy, a model in which businesses exchange data and functionality using open interfaces (APIs). In simple terms, APIs are ‘bridges’ that allow different applications to ‘talk’ to each other.

In the banking sector, this means that banks open up some of their services and data to external developers, but only with the consent of the client and in accordance with all security and regulatory requirements. For example, a FinTech company can access customer transaction information via an API to show them a cost analysis in a convenient app.

Thanks to open APIs:

• Developers can create financial products faster, without complex integrations.
• Banks can offer new services without having to build everything from scratch.
• Users can enjoy a more convenient, personalised experience and manage their finances through modern platforms.

This is the foundation of a new wave of financial innovation around the world - and now it is actively coming to Ukraine.

Examples of successful banking APIs:

• Plaid (USA) is a leading open banking platform that provides secure API access to more than 11,000 financial institutions in the United States. Plaid brings together banks and fintech companies to integrate transaction data, account balances and user authentication.
• Yodlee (USA) is a financial data aggregation platform based on the Open Banking API that combines information from multiple accounts with user consent. It supports web applications and provides tools to analyse financial data in FinTech solutions.
• Tink (EU) is a Swedish open banking platform that connects more than 3,400 banks across Europe. It provides APIs for account aggregation, payment initiation, identity verification and personal finance management. Partners include PayPal and BNP Paribas; in 2021, the company was acquired by Visa for $2.15 billion.

Microservice architecture: what it is and why it matters for Open Banking

Open Banking is encouraging a move from monolithic systems (where all services are tightly coupled and updated simultaneously) to microservice architectures, where each function or service operates separately and can be easily updated or replaced without affecting other parts of the system. This has several important benefits:

• Flexibility: individual components can be updated or changed independently without affecting the rest of the system.
• Scalability: new services or features can be added and launched quickly and without delay.
• Reliability: if one component fails, the system as a whole continues to function - errors are localised and do not affect the entire service.

Artificial Intelligence (AI) and Machine Learning (ML) in Open Banking

AI and machine learning in banking are enabling financial services to become more personalised and secure:

• Pattern recognition: artificial intelligence can analyse customer behaviour and offer them financial products that best suit their needs.
• Fraud detection: AI helps identify suspicious transactions in real time, reducing the risk of fraud.
• Automating decisions: AI can automatically make decisions about credit limits or loan approvals based on data, significantly speeding up processes.

Blockchain and smart contracts

Blockchain technologies play a key role in ensuring the security and transparency of financial transactions:

• Security and transparency: all transactions are recorded in an immutable ledger, making it easy to verify each step and minimising the potential for fraud.
• Smart contracts: these contracts are executed automatically under certain conditions, without the need for intermediaries. This reduces transaction costs and increases efficiency.
• DeFi (decentralised finance): enables the creation of new financial instruments and services where there are no traditional intermediaries such as banks or other financial institutions.

Payment Automation and Digital Wallets

Open Banking makes payment automation incredibly convenient and accessible through APIs:

• Contactless and mobile payments: users can make payments instantly using their smartphones or contactless cards.
• Instant transfers via digital wallets such as Apple Pay, Google Pay or Revolut, make financial transactions even easier and faster.
• Integration with customer accounts allows you to set up automatic payments, for example, for recurring payments or subscriptions, significantly reducing the time spent on financial management.

Together, these technologies are creating a new era in the financial sector, making banking services more convenient, faster and safer for users.

Open Finance - the next step beyond Open Banking

Open Finance is a concept that extends the idea of Open Banking beyond the banking sector to other financial services such as insurance, credit and investment services. This means that customers can now access and manage not only their bank accounts through a single platform, but also other aspects of their finances through standardised APIs. This approach provides more opportunities to create convenient and innovative financial products and services.

Here's how it works:

• Insurance: Open Finance provides access to a wide range of insurance products and policy terms through a single platform. Customers can compare prices and terms from different insurance providers and quickly access policy information to help them make more informed decisions.
• Lending: Open Finance enables banks and other financial institutions to collaborate with other data providers to jointly analyse the risks associated with lending. This allows for a more accurate assessment of customers' creditworthiness, making the lending process more transparent and accessible to more people.
• Investment services: investors can access data on their investment portfolios, exchange-traded instruments and other financial assets. This allows them to better manage their investments, receive personalised advice and optimise their financial strategies using data from multiple providers.

Benefits of Open Finance for customers:

The main benefit of Open Finance is that customers can use a single interface to access all their financial transactions - from banking to investments and insurance. This simplifies financial management, increases transparency and provides more opportunities to choose the best financial products.

Open Finance is an important step towards creating a single financial space, where each user can access the full range of services through one platform, increasing convenience and financial literacy.

Regulation and security of open banking

Regulation of Open Banking: PSD2 and other legislation

One of the most important regulations governing Open Banking in Europe is PSD2 (the second Payment Services Directive). This directive was adopted to ensure the openness and security of financial services. Under PSD2, banks must comply with some important requirements:

1. SCA (Strong Customer Authentication) is a two-factor authentication requirement. This means that customers are required to confirm their identity in two ways when accessing financial information or making transactions, for example, through a password and a one-time code sent to their mobile phone.
2. XS2A (Access to Account) — FinTech companies have the right to access users' financial accounts, but only with their explicit consent. This will allow the creation of new financial services that work with users' bank account data without violating their privacy.

PSD2 creates a level playing field for the development of new financial technologies, while protecting the interests of consumers and making their financial transactions more transparent and secure.

User authentication and access control

Modern authorisation technologies are used to ensure secure access to bank data. One of the most common is

• OAuth 2.0 - an authorisation system that allows you to grant access to data without revealing passwords. For example, when you give third-party applications access to your banking data, they only get permission to access it, not the passwords themselves.
• OpenID Connect is an extension to OAuth 2.0 that adds an extra layer of authentication. It gives you even more control over who has access to what data.

These technologies provide a high level of security and allow you to control who has access to your financial information.

Tokenising payments to improve security

Tokenisation is the process of replacing sensitive data (such as card numbers) with unique tokens that are only used for a specific transaction. This greatly reduces the risk of data breaches, as even if someone were to intercept the token, they would not be able to use it outside a specific transaction or network.

This method is an effective means of protection, ensuring that financial transactions remain secure even if the data falls into the hands of malicious actors.

Security challenges

Despite the high level of protection, open banking is still a target for various cyber threats. Key challenges include:

• Phishing attacks — attackers may create fake pages or messages that look like official requests from banks or financial institutions to obtain your personal information or access your accounts.

• Abuse of access by third parties — if you don't have sufficient control over a third party, their access to your financial information can be abused.

To prevent these threats, financial institutions need to constantly update their security mechanisms, train their staff and implement AI-based intelligent systems to monitor risks. AI can help detect anomalous transactions or user behaviour and respond quickly to threats.

Open Banking implementation in the world and in Ukraine

World leaders in the implementation of Open Banking

United Kingdom — Open Banking Limited (OBL).

Open Banking Limited, established under the requirements of the CMA (Competition and Markets Authority), has developed the national Open Banking standard in the UK. The initiative aims to increase competition, transparency and innovation in retail banking. As a result, more than 10 million users — both consumers and small businesses - are already actively using financial applications and payment instruments based on Open Banking.

The US is a Fintech-focused market.

In the United States, the open banking market is more focused on FinTech companies than on strict regulation, as is the case in Europe. One of the most prominent examples is Plaid, which is actively working as a bridge between financial institutions and third-party services. Plaid enables various applications to access users' financial data (for example, to create mobile applications for managing budgets, credit histories and investments). As the US actively supports the development of FinTech innovation, it is thanks to such players that the country's financial technology market is developing rapidly.

European Union — PSD2 and the development of open finance.

In the European Union, PSD2 provided a single regulatory framework for the development of open banking. This directive required banks to provide access to accounts through standardised APIs, creating an environment for innovation and growth of Open Finance, an even broader concept that includes access to insurance, investment and credit services. Thanks to PSD2, the EU has become a leader in the development of Open Banking, which has also stimulated the growth of a new type of financial service that uses data from multiple financial sources to create personalised offers for customers.

Open Banking in Ukraine: on the way to European standards

Despite the difficult conditions of war, Ukraine continues to move towards financial integration with Europe. One of the key steps in this direction was the approval of the Open Banking Concept by the National Bank of Ukraine in August 2023. It aims to create conditions for the secure exchange of financial data between banks, fintech companies and other market participants through open APIs.

This approach allows users to independently determine who should have access to their finances and to what extent, as well as to conveniently interact with various financial services through a single platform.

In addition, on 29 April 2025 the Ukrainian government approved a package of draft laws on Ukraine's compliance with EU requirements for joining the Single Euro Payments Area (SEPA) banking system for euro payments. This will allow businesses and citizens to make euro transfers between the 36 participating European countries extremely quickly, without additional charges and according to clearly defined rules. In essence, financial borders with the EU will be abolished.

The benefits of Open Banking are clear:

• The ability to manage accounts at different banks through a single interface.
• Increased competition between financial institutions is stimulating the development of new services and reducing the cost of services.
• Increased security through clear regulation of access to financial data.
• The emergence of new products and financial solutions.

But there are also challenges:

• The technical complexity of adapting systems to new requirements.
• Potential security risks are associated with the open exchange of sensitive information.

To help financial institutions overcome these challenges, Integrity Vision offers a turnkey solution — the TESOBE Open Bank Project. It is an open platform designed to implement open banking standards in line with regulatory requirements, including PSD2. It enables the reliable and secure exchange of financial data between banks and third parties.

Through a partnership with TESOBE, the founder of the Open Bank Project, the Integrity Vision team provides a full range of services: from API integration to the implementation of authentication mechanisms and user consent management. The solution has already been successfully implemented in EU countries such as Brazil, Mexico, Bahrain, Saudi Arabia, and Australia.

Implementing Open Banking with Integrity Vision is not only about meeting international requirements, but also about providing customers with modern, convenient and secure financial services.

Business Opportunities for Open Banking

How banks can monetise open APIs

1. API as a product. One of the most promising ways for banks to monetise their APIs is to offer access to them as a paid-for product. Banks can offer APIs on a subscription basis or charge a fee per use. This allows third-party financial service providers, such as FinTech companies, to integrate their services into the bank's ecosystem. In this way, banks can generate additional revenue by providing interfaces that allow other companies to interact with banking systems, as well as monetising data and services through platforms that are actively used.
2. Platforms for developers. The creation of developer platforms is another important area. Such platforms allow third-party companies and independent developers to create their innovative products using banking APIs. This stimulates an innovation ecosystem where new products and services can be brought to market much faster than traditionally, creating favourable conditions for banks themselves in terms of partnerships and new monetisation opportunities.

Bank partnerships with FinTech companies

1. Joint products. One of the main areas of partnership between banks and FinTech companies is joint product development. For example, banks can work with FinTech companies to develop loan products that can be accessed through mobile applications. This approach allows banks to expand their portfolio by offering new financial solutions to their customers, as well as attracting new users looking for convenience and speed of application.
2. Sharing data for better risk assessment. Partnerships with FinTech companies also allow banks to exchange data, which enables them to assess credit risks more accurately. As a result, banks can offer more accurate financial products based on user behaviour patterns and provide personalised loans or other financial services. Joint data analysis between banks and FinTech companies contributes to a better understanding of customers' financial needs and helps to minimise risk.
3. Leveraging big data in banking. Integrating big data into banking services helps to analyse customer behaviour in more detail. This makes it possible to create personalised offers and provide customers with solutions that best suit their financial habits and needs. The use of real-time data enables optimised offers and makes financial services more efficient.

Personalised financial services

• Manage your financial goals in one app. Customers can track and achieve their financial goals in one app by integrating data from different financial instruments, such as savings, loans, investments and expenses. This brings all the necessary financial tools together in one place, making financial management convenient and easy.

• Cost analysis with recommendations. Banks can use Open Banking data to analyse customer spending and provide useful recommendations on how to optimise their spending. These recommendations can include purchase analysis, budgeting suggestions or tips on how to get the most out of existing financial products such as credit cards or savings.

With such capabilities, Open Banking has great potential for innovation in the financial sector, creating new, convenient and personalised financial products and services for customers.

Conclusion

Open Banking is more than just a trend. It is a digital transformation of the financial sector that opens up many opportunities for creating new innovative services, increasing financial accessibility, expanding partner networks and driving development in banks and FinTech companies. Those who adapt to this model first will gain a competitive advantage, strengthen customer loyalty and respond effectively to new market challenges.

Don't miss the opportunity to learn more about modern Open Banking solutions and integrate advanced APIs into your financial services. Contact us today!