What is open banking? How it works, and what it means for new money apps
By SendPay Business · · 2 min read
Open banking lets people give an app permission to see their bank account or to start a payment from it, without handing over their password. In the UK it began with rules requiring the biggest banks to open up secure connections, and it has spread to many other countries.
How it works
The customer picks their bank in the app, is sent to their bank's own app or website to approve, and comes back. The app gets only what they approved, for as long as they allowed, and they can withdraw it at any time.
Two things it's used for
- Seeing account data: budgeting apps, lenders checking income, accountants pulling transactions.
- Starting payments: paying straight from a bank account instead of by card, often called pay by bank.
Why it's safe
The customer never shares their bank password with the app, approves everything in their own bank's app, and firms that use open banking in the UK must be authorised or registered with the FCA, or work through a firm that is.
What it means for a new money app
Open banking makes it easier for customers to move money into a new app and for businesses to get paid by bank transfer. When you choose a platform or partner, ask which open banking features it supports in your market.
Build it
Create your own financial platform.
Pick a template, name it, brand it, preview every page before you pay. Your brand, your users, your fees.
Build my platform →Questions people ask
Would pay by bank save me money?
Compare your card fees with pay by bank fees.
Pay by bank savings calculator →Is open banking the same as a bank account?
No. It's a secure way for apps to connect to an account a person already has.
Where can I look up other payments terms?
The payments glossary explains the words providers use, in plain English.
Payments glossary →How do money apps earn?
The neobank business model guide covers card, exchange, transfer and plan income.
How neobanks make money →Read next
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.