Open Banking

Open banking is a European Union directive (PSD2) aimed at advancing competition and innovation in the banking sector. The regulator achieves this by making it mandatory for banks to provide access to their banking data and/or specific parts of their infrastructure through APIs. Naturally, this requires involvement from a third party, which typically consists of various financial service providers. These financial service providers fall into three main categories: account information service providers (AISPs), payment initiation service providers (PISPs), and card-based payment instrument issuers (CISPs).
Through open APIs, banks grant access to third-party financial service providers for:

• Account data
• Initiating payment transactions

Users of open banking can benefit in several ways, including:

• Making more informed financial decisions and potentially reducing banking service fees through transparency and on-time feedback
• Saving significant time in financial administrative processes for small and medium-sized businesses
• Streamlining loan application procedures
• Facilitating “multibanking” for companies with multiple accounts, allowing them to manage all their accounts through a single interface quickly and easily
• Fostering innovation by creating new digital models, enabling online retailers to optimize commission revenue or helping banks establish new sales channels

It’s worth noting that not only businesses and fintech companies benefit from open banking; banks themselves do too. For instance, the introduction of new digital models, such as Bank-as-a-Service (BaaS), becomes possible. BaaS allows innovative processes to monetize banking infrastructure as a service through the cloud and APIs.
In summary, the BaaS model relies on APIs as its foundation, microservices as its framework, containerization as its driving force, and the cloud as its environment. In Hungary, there are already numerous financial service providers offering solutions based on open banking, providing plenty of options for users to choose from.