No matter where you live, you’ve probably heard the term “open banking.”
In fact, we’re willing to bet that you’ve heard it a lot more in the last few years than ever before.
That’s because open banking has been booming in popularity recently, ever since becoming a more commonly used practice in Europe over the last decade. It makes dealing with finances easy, fast and quick.
Under open banking, a user agrees to share their banking data (transactions, account history etc.) with a particular company. The company would connect with the user’s bank, which would share the information. That company can then use the information to determine things about the customer like their financial health and creditworthiness.
Open banking was first introduced in Europe years ago with the Payment Services Directive.
That’s not all – it’s expanded beyond Europe, too, gaining steam in countries like Brazil, Australia, Japan and many more. As open banking continues its global reach, we put together a quick overview of which countries have open banking.
Status: Operational in most countries except for Belarus, Serbia, Bosnia, Montenegro, Kosovo, Albania, Macedonia.
Europe is the birthplace of open banking. It’s where experts first started pursuing the idea of open banking and where regulatory bodies first began putting rules and directives into place to oversee the practice. The most influential was Payment Services Directive 2 (PSD2) in 2018, which brought open banking as we know it today to the forefront. PSD2 introduced a new set of rules and regulations to govern sharing data, ensure user privacy and more.
Since then, thanks to PSD2, open banking has made waves around Europe. It’s very popular in the UK, which recently reported 7 million open banking users across the country. It also has strongholds in Germany, Sweden, and Poland. However, that’s just a small number of the European countries that are growing in terms of open banking services. It’s safe to say that open banking is popular across the continent.
Operational: Turkey, China, Hong Kong, Taiwan, India, South Korea, Japan, Singapore, Malaysia, Bahrain,
In development: Saudi Arabia, Sri Lanka, Israel, Russia, Georgia, Ukraine, Philippines, Indonesia
Though no region is quite as dedicated to open banking as Europe, other continents are getting on board. In 2016, Singapore’s central bank published guidelines on open banking. Currently, banks are able to opt-in to open banking in Singapore, however the practice has become increasingly popular as the trend of financial technology takes off.
Hong Kong is also emerging as a large proponent of open banking. Hong Kong has helped financial institutions standardize the practice on their own. It has also released a four-part plan to spread open banking through the region.
Australia has been following closely behind European countries when it comes to open banking and open banking regulations. In 2018, the country started working on a phased open banking plan. In 2020, just a few years after PSD2 was implemented in Europe, open banking officially began with major banks in Australia. Since early 2022, users in Australia have been able to agree to full data transfers from their banks to accredited entities.
Operational: Brazil
In Development: Peru, Colombia, Chile
Open banking is coming to some South American countries with gusto. Namely, Brazil.
Brazil adopted open banking in 2021, with similar goals to the European initiative: to standardize data sharing between financial institutions. And, importantly, to make sure user consent and transparency with users is at the core of every data share. However, open banking participation is not necessary in all institutions
Other South American countries are not quite as advanced when it comes to open banking as Brazil is, but they are looking toward it.
In development: U.S., Canada, Mexico
In North America, Mexico has emerged as the country most receptive to open banking technology. In 2020, the country’s National Banking and Securities Commission published the first rules of open banking, regulating the exchange of banking data. Further rules are expected in 2023.
In the United States, open banking is not regulated on the state or federal level. Rather, it is organized by individual financial institutions and adoption has not been widespread.
Open banking gains ground in Africa
Operational: Nigeria
In Development: Egypt, Kenya, South Africa
Several countries in Africa are looking to open banking as a tool of the future, with some even beginning to establish open banking frameworks and plans for implementation.
Kenya released a payment plan in 2020 that favors open banking. Meanwhile their treasury and planning department is working on a plan to bring open banking to Kenya.
Nigeria, meanwhile, has been looking at implementing open banking since 2017 and, in March, the country finally released a list of open banking regulations, becoming the first country in Africa to do so.
Others, including Ghana and South Africa have also discussed the possibility of bringing open banking to their countries in the future, though there’s still work to be done.
For more updates and analysis on open banking, follow Kontomatik on LinkedIn
%20(1).jpg)
APIs are essential to the process of Open Banking because they pave the way for data sharing in a safe, secure, standardized and efficient w
%20(1).jpg)
A package of new draft proposals, PSD3 and PSR, includes plans to strengthen customer rights, combat fraud and improve APIs
%20(1).jpg)
Open banking is extremely popular around Europe, not just the UK
