It may be the case that in the U.S., consumer demand helps pull open banking toward a more complete realization of its potential. There are still key issues to be ironed out, especially as fraudsters target faster payments.
In Europe, open banking emerged under firm regulatory mandates like PSD2, which requires banks to allow third-party access via APIs without charging fees. This regulation is reinforced by the proposed PSD3, applicable across all member states, and the Financial Data Access Framework (FIDA), which expands data access and mandates the standardization of customer-level information and the technical interfaces across which that data is transmitted.
In the United Kingdom, open banking powered 27 million payments in March versus 1.92 billion card transactions in February, demonstrating scale and the remaining dominance of card rails.
Europe has used these foundations to scale use cases, from pay by bank to real-time payments, supported by interoperable systems that underpin neobanks and FinTech innovation across the region.
Fraud risks tied to open banking in the U.K. are rising into sharper focus, particularly around authorized push payment (APP) schemes, where consumers are tricked into consenting to transfers to fraudsters. Although banks and payment firms have improved reimbursement rates, as 67% of APP losses were refunded in 2023, up from 61% in 2022, payment firms remain inconsistent in compensation practices across the sector.
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The sophisticated social engineering tactics behind APP fraud have fueled concern that open banking platforms intended to enhance convenience may inadvertently heighten exposure to scams.
In the U.S., open banking progress depends on voluntary bank-FinTech partnerships and private-led projects. Firms have developed APIs, while many still rely on screen scraping, an approach that has security vulnerabilities.
What the Data Shows
Trust remains a barrier but also offers an opportunity. The PYMNTS Intelligence report “Consumer Sentiment About Open Banking Payments” found that about 11% of U.S. consumers used open banking payments, although 82% of those users were satisfied. A further 56% of consumers who had not used open banking cited security and trust concerns as key inhibitors. While close to 43% trust their banks to deliver open banking services, that leaves much work in awareness and credibility.
Pushback has intensified as banks look to impose fees for data access as they seek to recoup the costs of security and innovation, a move that critics on the FinTech and third-party provider side of the equation have said will create headwinds. In one example of the possible lure of moving beyond the economic issues still being hammered out in the U.S. toward relatively more mature markets, Visa this month shuttered its U.S. open banking unit amid mounting friction, opting to focus instead on European and Latin American markets where mandates govern data access.
Some of these issues may be determined over the next few months. The Consumer Financial Protection Bureau launched a high-profile revision of open banking rules under Section 1033 of Dodd-Frank, seeking to restore consumer control over data, but where fee structures may be shaped by the commentary of private market participants, rather than leaving access subject to an agreement-by-agreement basis.
As for a meeting in the middle between providers and customers, the PYMNTS Intelligence report “What Consumers Need for Pay by Bank to Catch On” found that offering cash back or loyalty perks boosts consumer interest by 72%, suggesting provider-driven strategies may fill awareness gaps, and the prospects of saving money also helps individuals move toward open banking.
