Open Banking is a regulatory and technological framework that lets licensed third parties access bank account data and initiate payments via APIs, with the account holder's consent. It powers real-time multi-bank visibility, instant account-to-account payments, and modern treasury connectivity beyond batch file feeds.
Open Banking is a framework that gives licensed third parties standardized, API-based access to bank account data and the ability to initiate payments on behalf of the account holder, provided the account holder has given explicit consent. It replaces decades of screen-scraping and ad hoc file feeds with regulated, interoperable interfaces that banks are obligated to expose and maintain.
The modern Open Banking movement originated in the European Union with the second Payment Services Directive, known as PSD2, which became effective in January 2018. PSD2 forced banks across the EEA to publish APIs that licensed third parties could use to read account information and initiate payments, breaking the historical monopoly banks held over their customers' transactional data. The United Kingdom launched a parallel Open Banking standard in 2018 covering the nine largest retail banks, aligned with PSD2 but governed separately after Brexit.
The next wave is already in motion. The European Commission has proposed PSD3 and a complementary Payment Services Regulation, expected to take effect between 2026 and 2027, tightening API performance standards and clarifying liability. In the United States, the CFPB finalized its Section 1033 rule in October 2024, mandating Open Banking style data access for US financial institutions with phased compliance running from 2026 through 2030. Brazil, Australia, Singapore, and Hong Kong are all rolling out their own variants under labels such as open finance and the Consumer Data Right.
Open Banking APIs fall into two regulated categories, and most AR and treasury use cases blend them.
AIS, the Account Information Service, provides read-only access to balances and transaction history. It is what powers real-time multi-bank cash visibility, automated reconciliation feeds, and instant account verification at order entry.
PIS, the Payment Initiation Service, lets a licensed provider initiate a payment directly from the payer's bank account. This is the engine behind Pay by Bank checkout flows, B2B account-to-account collections, and authorized recurring payment instructions.
A third category, Card-Based Payment Instrument Issuer Services, lets providers confirm whether funds are available, but it sees less use in AR contexts.
To call Open Banking APIs in production, a company must be licensed as a Third-Party Provider, or TPP. There are two main licence types: AISP for account information access and PISP for payment initiation. Licensing is granted by national regulators and passported across the European Economic Area.
The most active supervisors in Europe include BaFin in Germany, the FCA in the United Kingdom, and ACPR alongside AMF in France. Each regulator maintains a public register of authorized TPPs, and banks are required to verify the certificate of any provider that calls their APIs. Most AR and treasury vendors either hold their own AISP licence, partner with a licensed aggregator, or both.
For finance teams, Open Banking changes the economics of bank connectivity in three concrete ways.
Real-time multi-bank cash position. Instead of waiting for end-of-day MT940 or camt.053 files, treasury can pull intraday balances and movements across every connected account through a single API layer. This collapses the gap between what the bank knows and what the cash forecast assumes.
Lower-cost collections. Pay by Bank links embedded in invoices and dunning emails let customers approve a payment in their banking app in seconds. The economics are far better than card rails, with no interchange fee and same-day or instant settlement on supported schemes.
Cleaner onboarding. AIS-based account verification confirms that a customer's bank account is real, active, and in their name before the first invoice goes out. That alone removes a large share of R-transactions, returned direct debits, and failed refunds downstream.
Open Banking is regulated but not uniform, and the operational details determine whether a rollout actually delivers.
Coverage varies by country. The United Kingdom, Germany, the Netherlands, and the Nordics have mature ecosystems with broad bank coverage and reliable APIs. Southern European markets remain patchier, with thinner corporate account support and more frequent API outages.
Strong Customer Authentication adds friction. Under PSD2, the account holder must re-authenticate AIS consent at least every 90 days, and every PIS payment requires fresh authentication. PSD3 is expected to relax the 90-day rule for many corporate scenarios, but teams should plan today's flows around it.
API quality is uneven. Banks implement the same standards differently, and corporate accounts often sit on different endpoints than retail. Most production deployments rely on an aggregator that abstracts the fragmentation, monitors uptime, and normalizes data formats before it reaches the AR or treasury platform.
An AI-native AR platform treats Open Banking as a primary data and execution layer rather than a side feature. Real-time AIS feeds keep the cash position continuously current, so that cash application, dunning prioritization, and DSO reporting all run against live numbers instead of yesterday's bank file. Agentic workflows can pull a single transaction the moment it lands, match it to an open invoice, and close the receivable without waiting for the next batch cycle.
On the collections side, PIS turns dunning into a one-tap action. A reminder email carries a Pay by Bank link pre-filled with the invoice amount, currency, and reference, and the customer authorizes the transfer inside their own banking app. The funds settle directly into the seller's account, often within seconds on instant payment schemes, for a fraction of the cost of a card transaction in euros. Combined with AIS-based account verification at order entry, the result is faster cash, fewer failed payments, and a connectivity stack that is finally built for real-time finance.
Open Banking is a framework that lets licensed third parties access your bank account data and initiate payments through APIs, but only when you give explicit consent. For businesses, it means software can read balances and transactions or trigger a payment directly from a bank account, without screen-scraping or manual file uploads.
AIS (Account Information Service) is read-only access to balances and transaction history, used for cash visibility, reconciliation, and account verification. PIS (Payment Initiation Service) lets a licensed provider start a payment from the account holder's bank, used for Pay by Bank checkout and account-to-account collections.
PSD2 is the EU regulation that created Open Banking in Europe by forcing banks to open APIs to licensed third parties. Open Banking is the broader practice and now exists under separate frameworks in the UK, the US (CFPB Section 1033), Brazil, Australia, and others. PSD3 and the Payment Services Regulation are expected to extend PSD2 from 2026 to 2027.
National financial regulators license and supervise Third-Party Providers. In Europe that includes BaFin in Germany, the FCA in the United Kingdom, and ACPR in France, with licences passportable across the EEA. Each regulator maintains a public register of authorized AISPs and PISPs.
It gives treasury real-time visibility into balances and transactions across multiple banks without batch file infrastructure, lets AR offer Pay by Bank as a low-cost alternative to cards, and enables instant account verification at customer onboarding to reduce returned payments and failed direct debits.
Yes. The UK runs its own Open Banking standard, the US is rolling out CFPB Section 1033 with phased compliance from 2026 to 2030, and Brazil, Australia, Singapore, and Hong Kong all operate their own variants under open finance or consumer data right labels. Coverage and API maturity still vary by market.
