THE STATE OF OPEN BANKING AROUND THE WORLD
Banking ecosystems are being formed as a by-product of open banking , or third-party data sharing between banks and other financial providers worldwide . Below , we look at the two approaches to open banking in different markets across the globe .
Regulatory-driven Open banking is enforced by regulations in both the UK and EU . After the revised Payment Services Directive ( PSD2 ) was passed in 2018 , it became mandatory for large banking institutions to share data with third-party financial services providers . The passing of this regulation paved a path for challenger banks , notably Revolut , Monzo and Starling in the UK , to streamline open banking and foster digital ecosystems in financial services .
Outside of the EU , though , Hong Kong and Australia have both adopted a regulatory-driven approach to open banking too . In 2018 , The Hong Kong Monetary Authority issued an Open API Framework , with a four-stage approach for banks to integrate open APIs . Unlike the EU , banks in Hong Kong must restrict access to third-party providers they partner with .
Meanwhile , Australia ’ s Consumer Data Right Act allows consumers to share their data with third parties of their choice . Unlike the EU , this is a data policy as opposed to a financial one , with a focus on customer-centricity .
Market-driven In markets including the US , India , South Korea and Japan , open banking is driven by the markets . After regulation in the EU and other markets , many banks in other jurisdictions have opted to share third-party data in order to generate revenues as they look to stay ahead in the digitisation of the global banking industry .
Major US banks are already developing API-based offerings , entering into third-party contracts to attract new customers and gain a competitive edge .
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