This guide is part of the Open Banking hub, covering open banking, the digital pound, and the future of UK financial data.
Open banking launched in the UK in January 2018 and has since become one of the most significant changes to how people manage their finances. It lets you securely share your bank account data with authorised apps — enabling better budgeting, faster loan decisions, and smarter switching tools — without ever handing over your password.
What Is Open Banking?
Open banking is a system that allows you to share your bank account data — transaction history, balances, income patterns — with FCA-authorised third-party apps and services, through secure encrypted connections called APIs (Application Programming Interfaces).
The key distinction from older approaches is that you never give a third-party app your bank login credentials. Instead, when you connect an app, you are redirected to your bank’s own secure website or app to approve access. The bank then sends a secure token to the third-party app. Your password never leaves your bank.
| Feature | Details |
|---|---|
| What it does | Lets you share bank data with authorised apps |
| How it works | Encrypted API connections between banks and apps |
| Regulated by | FCA (Financial Conduct Authority) |
| Launched in UK | January 2018 |
| Who controls access | You — consent required, revocable anytime |
Two Types of Open Banking Service
There are two distinct categories of open banking service, with very different capabilities.
Account Information Services (AIS)
Account Information Services can read your account data — transactions, balances, income — but cannot move money. The vast majority of open banking apps are AIS providers. Budgeting apps, comparison tools, and income verification services all fall into this category.
| Feature | Details |
|---|---|
| What they can do | View account data, transactions, balances |
| Can they take money? | No — read-only |
| Common uses | Budgeting apps, all-accounts-in-one-place views |
| Examples | Emma, Money Dashboard, Snoop, Plum |
Payment Initiation Services (PIS)
Payment Initiation Services can make payments directly from your bank account — but only after you explicitly approve each individual payment. You will always be redirected to your bank to confirm. PIS is used for paying bills, tax payments, and direct merchant checkouts.
| Feature | Details |
|---|---|
| What they can do | Initiate payments from your account |
| Your permission required | Yes — each payment individually |
| Common uses | Bill payments, merchant checkout, HMRC tax |
| Examples | GoCardless, Trustly, HMRC online payments |
Banks That Support Open Banking
All major UK banks and building societies are required to support open banking under FCA rules. This covers every high-street bank, major digital bank, and most building societies.
| Bank / Provider | Open Banking Status |
|---|---|
| Barclays | Full support |
| HSBC | Full support |
| Lloyds Banking Group | Full support |
| NatWest Group | Full support |
| Santander | Full support |
| Nationwide | Full support |
| Monzo | Full support |
| Starling Bank | Full support |
| TSB | Full support |
| Metro Bank | Full support |
The full register of participating institutions is maintained by Open Banking Limited at openbanking.org.uk.
Popular Apps Using Open Banking
Budgeting and Money Management
These apps connect to your bank accounts via AIS to give you a single view of all your finances, categorise spending automatically, and help you identify where money is going.
| App | What It Does |
|---|---|
| Emma | Tracks spending across multiple accounts, surfaces subscriptions |
| Money Dashboard | Budget tracking and spending categories |
| Snoop | Bill-switching alerts and spending insights |
| Plum | AI savings automation and budgeting |
| Chip | Automatic savings based on spending patterns |
Lenders and Mortgage Brokers
Open banking has significantly changed the mortgage and loan application process. Rather than printing and posting three months of bank statements, you can authorise an instant data share that verifies your income and spending in seconds. What used to take two weeks of document gathering now takes minutes.
| Use Case | What Open Banking Provides |
|---|---|
| Mortgage applications | Automated income and expenditure verification |
| Personal loan applications | Faster affordability checks |
| Buy-to-let assessments | Rental income verification |
| Rent references | Prove income to letting agents |
Payment Services
| Service | Use |
|---|---|
| HMRC | Pay Self Assessment, VAT, and other taxes directly |
| GoCardless | Direct account payments for businesses |
| Trustly | Online checkout via bank transfer |
Is Open Banking Safe?
Open banking has a robust security architecture, and the UK’s implementation is considered one of the strongest globally.
Core Security Features
| Protection | How It Works |
|---|---|
| FCA regulation | Only authorised providers can participate |
| Encrypted API connections | Data travels via secure APIs, not screen-scraping |
| No password sharing | You authenticate on your bank’s own site |
| Tokenised access | Apps receive a secure token, not your credentials |
| Read-only by default | AIS providers cannot initiate payments |
| Revocable at any time | Withdraw access instantly via your bank app |
A common concern is whether an app could empty your bank account. With a standard AIS provider this is architecturally impossible — they have no capability to move money. Even with a PIS provider, every payment requires fresh authorisation from you through your bank. No open banking provider can silently take money without your active approval.
What Cannot Happen Under Open Banking
| Risk | Why It Is Protected |
|---|---|
| App moving money without permission | Impossible with AIS; PIS requires per-payment consent |
| App stealing your password | You log in on your bank’s site — app never sees credentials |
| Unauthorised connection | Your explicit consent is required before any access begins |
| Data being sold | FCA rules restrict use; GDPR applies |
How to Spot a Legitimate Provider
| Sign | What It Means |
|---|---|
| Redirects you to your bank to log in | This is the correct, secure flow |
| Listed on the FCA register | Mandatory for all legitimate providers |
| Shows clearly what data it will access | Regulated apps must disclose permissions |
| Offers a way to revoke access | All regulated providers must support this |
Red flag: Any app or website that asks you to type your bank username and password directly into their interface — rather than redirecting you to your bank — is not a legitimate open banking provider and may be a phishing attempt.
How to Connect Your Accounts
Connecting an app via open banking takes two to three minutes and follows the same flow with every provider:
- Download the app and start the account-connection process
- Select your bank from the list
- You are redirected to your bank’s website or app
- Log in with your normal bank credentials (on your bank’s site)
- Review the permissions the app is requesting
- Approve the connection
- Return to the app — your account data is now accessible
Revoking Access
You can see every app connected to your bank account and remove any at any time:
- Open your bank app
- Find “Connected apps”, “Open banking”, or “Third-party access” in settings
- Select the app to manage
- Choose “Remove access” or “Disconnect”
Access is revoked instantly. Most banks also notify you when a new open banking connection is made, so you will be aware of any unexpected activity.
Practical Use Cases
Budgeting
Rather than manually entering transactions into a spreadsheet, open banking-powered budgeting apps automatically import and categorise every transaction across all your connected accounts. You get a real picture of your spending — across your current account, savings, and credit cards — in one place.
Mortgage and Loan Applications
| Traditional Process | With Open Banking |
|---|---|
| Print 3 months of bank statements | Instant digital data share |
| Wait for lender to process | Automated income and spending check |
| May need to resubmit documents | Verification complete in minutes |
| Process takes days to weeks | Often same-day |
Getting Better Deals
Comparison services that use open banking can analyse your actual income and spending patterns to show you products you are genuinely likely to be approved for — making credit and insurance comparisons more accurate and reducing the risk of declined applications that can affect your credit file.
Open Finance: What Comes Next
Open banking currently covers current accounts and payment accounts. The next phase — Open Finance — would extend the same consent-based principles to pensions, ISAs, mortgages, and insurance.
| Development | What It Would Mean |
|---|---|
| Open Finance | Share pension, mortgage, and investment data with authorised tools |
| Pension Dashboards | See all pension pots in one place — already in development |
| Smart Data Scheme | Government-backed extension to energy and telecoms sectors |
| Mortgage data sharing | Switch or compare mortgages with real data, not estimates |
For a broader view of how digital financial infrastructure is evolving in the UK, see the guide to the digital pound explained.
Summary
- Open banking lets you share bank data with FCA-authorised apps via encrypted APIs — you never give apps your password
- AIS providers (budgeting apps, comparison tools) can read your data but cannot move money
- PIS providers can initiate payments, but only with your explicit approval for each transaction
- All major UK banks are required to support open banking
- Security is strong: no password sharing, read-only access by default, revocable at any time
- Practical benefits include better budgeting, faster mortgage applications, and more accurate product comparisons
- Open Finance will extend these principles to pensions, mortgages, and insurance
For context on how open banking-connected accounts differ from traditional banking in terms of protections, see the guide to e-money accounts vs bank accounts.