Banking & Financial Technology

Open Banking How It Works and What to Know

Understand open banking, how financial data can be shared with authorised providers, how open banking payments work, the role of customer consent and the security considerations to understand before using an open banking service.

✓ Clear financial education ✓ Practical explanations ✓ Security-focused guidance
Person using digital banking and financial technology
Open banking Connected financial services Understand data sharing, consent, payments and the role of authorised providers.
Understanding Open Banking

What is open banking?

Open banking is a system that allows customers to securely share certain information from their bank accounts with authorised third-party providers, when they choose to give permission.

It can also enable certain services to initiate payments from a customer's bank account after the customer has provided the required consent and authentication.

The idea behind open banking is to give customers greater control over how their financial information can be used and to encourage new financial products and services that can connect with traditional bank accounts.

Why was open banking introduced?

Open banking was developed to support greater competition and innovation in financial services while giving customers more choice over how they access and use financial products.

Instead of financial information being isolated within one bank, authorised services can connect to eligible accounts when the customer chooses to grant access.

People using connected financial technology services
Financial Data Sharing

How does open banking data sharing work?

Open banking data sharing normally begins when a customer chooses to use a service that needs access to information held by their bank or another financial provider.

The customer is taken through an authorisation process where the relevant permissions and information are presented. If the customer agrees, the authorised provider can access the permitted information under the applicable arrangements.

01
Choose a service You decide to use a financial service that requires access to eligible account information.
02
Review the request Check what information is being requested and why the provider needs access.
03
Give consent You authorise the relevant access through the appropriate banking authentication process.
04
Use the service The authorised service can use the permitted information for the purpose explained during the consent process.
Open Banking Payments

How do open banking payments work?

Open banking can also support payment services that allow a customer to authorise a payment from an eligible bank account through a participating service.

01

Start the payment

The customer chooses an open banking payment option offered by the merchant or service.

02

Select the bank

The customer identifies the relevant bank or account provider where the payment is to be authorised.

03

Authenticate

The customer completes the required authentication and reviews the payment details.

04

Authorise payment

Once authorised, the payment proceeds according to the relevant banking and payment arrangements.

Benefits & Uses

What are the potential benefits of open banking?

Open banking can create useful connections between bank accounts and financial services. The practical value depends on the service, provider and permissions involved.

Better financial visibility

Some financial management services can bring information from supported accounts together, helping customers understand their overall financial position.

  • View eligible account information in one service.
  • Understand income and spending patterns.
  • Reduce the need to manually enter financial information.

More connected financial services

Open banking APIs can allow authorised services to connect with participating financial institutions and build new tools around existing banking infrastructure.

  • Financial management applications.
  • Account information services.
  • Payment initiation services.

Greater customer choice

Open banking can make it easier for customers to consider alternative financial products and services that work with eligible bank accounts.

  • Compare different financial services.
  • Explore new digital financial tools.
  • Choose services that fit particular needs.

Potentially simpler payments

Supported open banking payment services can provide another way for customers to authorise certain payments directly through their bank.

  • Payments can be authorised through the bank.
  • Payment details can be reviewed before approval.
  • Availability depends on the merchant and provider.
Security & Privacy

Is open banking safe?

Open banking involves financial information and therefore requires customers to understand who they are dealing with, what access is being requested and how authentication works.

Important security habits

Good digital security practices remain important when using any service that connects to your bank account.

  • Use official banking websites and applications.
  • Check the provider before granting access.
  • Read the consent request carefully.
  • Never share unexpected security codes.
  • Contact your bank if something appears suspicious.

Think carefully about data access

Financial information can reveal details about income, spending and account activity. Before giving permission, understand what information the service wants and why it needs it.

  • Review the provider's privacy information.
  • Understand the purpose of the requested access.
  • Check how long access may remain active.
  • Understand how to manage access when you stop using the service.
Compare Services

Account information and payment services

Open banking can support different types of services. Understanding the distinction helps explain why a provider may request access to your bank account.

Area
Account information service
Payment initiation service
Main purpose
Provides a way to access permitted account information.
Provides a way to initiate an eligible payment.
Typical use
Financial management and account information tools.
Payments through participating merchants or services.
Customer action
Customer gives permission for relevant information access.
Customer reviews and authorises the payment.
Information involved
Eligible financial account information.
Relevant payment details and account information.
Availability
Depends on the provider, account and service.
Depends on the payment provider, bank and merchant.
Using Open Banking Responsibly

What should you check before using an open banking service?

Open banking can be useful, but the decision to connect a financial account should be made carefully. A few checks can help you understand what you are agreeing to.

Check the provider

Make sure you understand which company or service is requesting access to your financial information. Use trusted and official channels when starting the connection process.

Review the information being requested

Read the consent screen carefully. Consider whether the information requested makes sense for the service you are trying to use.

Understand the service's terms and privacy information

Before giving permission, review relevant terms and privacy information so you understand how your information may be handled.

Keep your banking credentials private

Use the official authentication process provided by your bank. Do not disclose passwords, one-time codes or other security information to unexpected people.

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Frequently asked questions about open banking
Frequently Asked Questions

Questions about open banking

Open banking services can differ between providers. Always check the latest information, permissions and terms before connecting a financial account.

Open banking allows customers to securely share eligible financial account information with authorised third-party providers when they choose to give permission. It can also support certain payment services.
A customer chooses a service that needs access to an eligible bank account, reviews the requested permission and authorises access through the relevant banking authentication process.
Open banking data sharing is the process of allowing an authorised service to access permitted financial account information after the customer has provided the required consent.
Open banking can support payment initiation services where the relevant bank, provider and merchant support the service. The customer normally reviews and authorises the payment through the appropriate process.
Open banking services use security and authentication processes, but customers should still verify providers, review permissions and protect their banking credentials.
The information required depends on the service. Open banking is based on customer permission for access to eligible financial information or payment services.
An account information service can provide a way for an authorised provider to access permitted account information so that it can deliver a financial service to the customer.
Check who the provider is, what information or payment permission is requested, why it is needed and what the provider's terms and privacy information say.
Continue Exploring

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Important: GrowthSmartly provides general financial education and information. It does not provide personalised financial, investment, tax, legal, mortgage, insurance or banking advice. Open banking services, eligibility, permissions, security processes and provider terms can change. Check the latest information directly with the relevant bank or authorised service provider before making a financial decision.
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