Reviewed by Sep 30, 2020| Updated on
Open banking, also known as open bank data, is a banking practice that allows third-party financial service providers to access consumer banking, transaction, and other data from banks and NBFCs through APIs.
Open banking allows consumers, financial institutions, and third-party service providers to use the network of accounts and data across institutions. Customers must agree to share their data by checking a box next to the 'terms of service' screen on the app. APIs of third-party providers can get the access to the customer data.
Instead of centralisation, the concept of open banking makes large, established banks to be more competitive with small and new banks. Large banks will have to put effort to adopt new technologies to provide better customer service at lower costs.