Open banking and open finance: what's the difference

Open banking is a secure and regulated way for people and businesses to share access to payments data from their bank account with trusted apps and services¹. It is not compulsory, you will not be opted in automatically, and nothing moves until you give explicit permission to a named provider². In practice it does two things: it lets an app read your account information, and it lets a payment be sent straight from your bank account without a card.

Open finance is the same idea applied to a wider set of products. Open banking in the UK was built around current accounts, and most current accounts with online or mobile access can be connected, while some savings, investment and mortgage accounts may not be supported³. Extending data sharing and payments beyond current accounts, to savings, investments, mortgages, insurance and pensions, is what open finance describes. The rules and the plumbing for that wider version are still being built.

The scale is already significant. The Payment Systems Regulator counts over 7 million active open banking users in the UK⁴. Open banking came on-stream in 2018, initially offered by nine of the biggest banks in the UK².

What open banking lets you do with your bank account

Open banking works by enabling financial institutions to share account information and make payments through APIs, the technical connections that sit behind the scenes³. It allows people and businesses to link their accounts with third parties offering payment services, providing a secure and cost-effective alternative to using card networks⁸.

For a consumer, that produces two broad categories of service. The first is information: an app can see your balance, your transactions and your regular payments, and use that to build a budget, check affordability, or gather several accounts in one place. The second is payment: money moves directly from your bank account to a business or another person, without a card being involved.

The data that can be shared is specific rather than open-ended. It covers the account name, number and sort code, a card number for credit cards, the account balance and currency, Direct Debits, standing orders, recurring and future-dated payments and payee agreements, incoming and outgoing transactions, statement information, and product details including benefits, offers, rewards, fees, charges and interest³. A narrower list from another provider describes balances and transaction history, the names on the account, regular Direct Debits and payments, and your incomings and outgoings².

What open banking does not do is give a third party the keys to your account. The connection is read-only unless you have specifically authorised a payment, and the third party never receives your login credentials.

Open finance: extending sharing beyond current accounts

Open finance takes the open banking model and points it at everything else a person holds. Where open banking covers payments data from a bank account, open finance covers savings, investments, mortgages, insurance and pensions as well, so that a single view of someone's finances could include products from several providers.

The direction of travel is visible in the official work. The Financial Conduct Authority maintains a dedicated open banking and open finance page for firms¹, and in June 2026 around 80 stakeholders and experts met over two days for a policy sprint on the conditions for open finance to improve mortgage journeys. Separately, HM Treasury consulted in July 2026 on how payment services regulation should adapt to innovations including tokenised payments, Open Banking and agentic payments.

For a consumer today, the practical difference is coverage. If a service asks to connect your current account, that is open banking and it is well established. If it asks to connect a savings account, an investment account or a mortgage, that is the open finance frontier, and support varies by provider and product. Some savings, investment and mortgage accounts may not be supported at all³.

What data can be shared, and with whom

Data is shared with third-party providers through APIs². Those providers are the apps, budgeting tools, payment initiators and account aggregators that sit between you and your bank. They need your explicit permission before they access your data through open APIs⁶.

The categories of data are set out by the banks themselves. One provider lists account name, number and sort code, card number for credit cards, account balance and currency, Direct Debits, standing orders, recurring, future-dated payments and payee agreements, incoming and outgoing transactions, statement information, product types including benefits, offers, rewards, fees, charges and interest, and the full names of all account holders³. Another describes balances and transaction history, names on the account, regular Direct Debits and payments, and incomings and outgoings². A third lists whether you pay a monthly fee on your account, details of Direct Debits and standing orders, your account balance and transactions, and the interest you earn or pay and any charges¹⁰.

Two points matter for privacy. First, the full names of all account holders can be part of the shared data, which is relevant on a joint account. Second, if you have chosen to hide or unhide payment references in your bank's app, that setting is matched when data is shared through open banking¹⁰.

Open banking payments: pay by bank and how fast they arrive

Open banking payments are made using the Faster Payments System³. That is the same rail that sits behind an ordinary bank transfer, which is why the money usually arrives quickly rather than over days.

The timings quoted by providers and official bodies are consistent. Money sent using Faster Payments through online banking on a smartphone app will reach the recipient's account within 2 hours, and sometimes it is received immediately¹¹. A government payment service says the payment is usually instant but can take up to 2 hours to show in your bank account¹². National Savings and Investments says that in most cases the money will leave your bank account straight away, and it can take up to two hours to reach your account⁹.

Pay by bank appears under different names at different providers, such as 'Pay by bank' or 'Pay with Bank Transfer'¹⁰. It is used predominantly for one-off payments⁶, though the underlying open banking rails support more: one-off payments, recurring payments, future-dated payments and standing orders are all supported¹⁰. A bank's own list of options includes immediate payment, future-dated payment, standing order and Variable Recurring Payment from a current account for UK payments³.

Consent: you choose what is shared and for how long

Consent is the control at the centre of the whole system. The app or website will ask for your consent to access your account data either as a one-off, or for a period of time such as 2 years³. You can choose how long you want to share your data with an approved third party, and you can stop sharing at any time by contacting your bank or the third party¹⁰.

Consent is not indefinite even when you have granted it for a long period. Providers ask for your consent every 90 days to carry on accessing your data³. That renewal is a checkpoint: if you do nothing, the access lapses.

Participating banks and building societies should provide an authorisation dashboard where you can see a list of providers with permission to access your account data, and you can withdraw permissions whenever you wish, at the press of a button⁶. That dashboard is the single most useful thing to know about, because it shows you every live connection rather than making you remember them.

How to connect an account and stop sharing

Connecting an account starts with your own bank, not the third party. You must be using online banking for open banking to work, because the premise is the sharing of data². When you agree to a connection you are sent to your bank to authenticate, and the third party never sees your credentials.

Managing connections differs by bank. One provider says you can only add and manage open banking accounts using its mobile banking app, while online banking can be used to review and manage permissions for third parties³. Another sets out the steps in its app: choose the profile icon in the top left of the screen, then choose Open Banking Connections¹⁰.

To stop sharing, you have two routes. You can contact your bank or the third party directly and ask them to stop¹⁰, or you can use the authorisation dashboard to withdraw permissions at the press of a button⁶. If you are closing or moving accounts, remember that a joint account creates a financial link that outlasts the account itself: closing a joint account will not remove the link to the other person from your credit file, and a 'notice of disassociation' can be requested from credit reference agencies if there is no other financial connection¹³. The same step can be needed before applying for a new account¹⁴.

Staying safe: checking a provider is FCA-authorised

Before sharing anything, check the firm. The Financial Conduct Authority has a tool to help consumers check if financial services firms are authorised and have permission to sell products and services⁷. The Financial Ombudsman Service points people to the same Firm Checker to confirm a firm is authorised and help avoid scams¹⁵. You can also check whether a provider or adviser is authorised by the PRA or FCA on the FCA register¹⁶.

The check matters because authorisation is the gateway to protection. For investment protection, the provider must be authorised by the Financial Conduct Authority or the Prudential Regulation Authority¹⁷. For the Financial Ombudsman Service to look at a complaint, the provider must be regulated by the FCA¹⁸. A credit broker must be on the FCA's Financial Services Register to be authorised and regulated¹⁹.

The Financial Ombudsman Service is operationally independent of the regulator while following the rules in the FCA handbook²⁰. If something goes wrong with an open banking connection, complain to the third-party provider you shared your data with in the first instance, and if they do not resolve the issue you can take the complaint to the Financial Ombudsman Service⁶.

What happens if a payment goes wrong

Open banking payments sit in a different protection regime from card payments, and the difference is worth understanding before you choose how to pay.

If a payment was not authorised, your bank must refund you immediately, unless it has grounds to suspect fraud or negligence. If the third party was at fault, the bank can recover the funds from them⁶. That is the route for a payment you did not approve. For a payment you did approve, the position is different: the bank may be able to cancel the payment or put the money back into your account²⁵, but there is no automatic right to a refund simply because you have changed your mind.

Compare that with a Direct Debit, where the guarantee is stronger. If you cancel a direct debit, your bank should ensure that no payments are taken, whether or not you owe money to the company in question²⁶. And compare it with a card payment, where Section 75 and chargeback can apply. Paying a business by open banking instead of by card means you lose both⁶.

The practical rule is that pay by bank suits a payment you are confident about, to a business you have checked, where speed and the absence of card fees matter. For a large purchase from a trader you do not know well, a credit card carries protections that a bank transfer does not.

Where open finance is heading

Open finance is being built out through policy work rather than a single switch. The Payment Systems Regulator describes open banking as allowing people and businesses to link their accounts with third parties offering payment services, providing a secure and cost-effective alternative to using card networks⁸, and the Open Banking Implementation Entity has played a central role in developing the UK's ecosystem⁸.

The regulatory interest is broader than payments. The FCA has been given broader powers on access to cash by the government after the Financial Services and Markets Act 2023 became law²⁷, and it has set out expectations for firms when implementing branch or ATM closures, including considering the likely impact on customers, communicating changes clearly and in good time, and taking appropriate steps to ensure customers can continue to have appropriate access to banking and cash services²⁸. Those are separate from open finance, but they show the same policy concern: making sure people can reach and use their money.

For a consumer, the sensible position is to treat open banking as established and useful, and open finance as arriving. The consent model, the authorisation dashboard and the Firm Checker already apply. As more product types come into scope, the same habits carry over: check the firm, grant the minimum you need, and review your connections periodically.