Open banking—or more broadly, open finance—allows financial institutions, through permissions from their customers, to share both financial and non-financial information about these customers with other institutions.
For example, a person trying to get an estimated premium on an insurance policy for their car might allow the insurance company to access their car maintenance and repair history from the dealership, not necessarily financial data from their bank.
Even though this improves the level of transparency, it also opens up opportunities for data abuse.
Frameworks such as the EU's Payment Services Directive [↗] are designed to provide a legal framework that sets boundaries and establishes measures that anyone or any institution engaging in open financial services must abide by.
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