Open finance lets people and businesses share financial data with approved apps through secure APIs, with their consent. It extends open banking, which covers bank accounts and payments, to savings, investments, pensions, insurance and credit. Providers use the data to verify accounts, start payments and personalize services.
Every manual step in a customer journey costs you something. A sender types a routing number by hand, waits days for a test deposit or uploads a statement. Some give up. Open finance replaces those steps with a data connection that the customer approves and controls.
For remittance businesses, the timing matters. A 1% US excise tax has applied since January 1, 2026. The IRS says it hits transfers where the sender provides cash, a money order, a cashier’s check or a similar physical instrument. BDO’s analysis of the proposed rules points to bank-account and card funding as outside that tax. Senders now have a reason to link a bank account, and your platform needs a safe, fast way to let them.
Key Takeaways
- Definition: Open finance is consent-based sharing of financial data through APIs. It extends open banking beyond bank accounts to investments, pensions, insurance and credit.
- Control: The customer decides who sees their data, what is shared and for how long, and can revoke access at any time.
- Uneven rollout: The UK and Brazil run mature, scaled systems. The EU’s open finance law is stalled, and the US rule is on hold in court.
- Remittance impact: Pay by bank, instant account verification and ownership checks can cut friction and fraud at the funding step. They do not replace KYC, AML or the cross-border payout leg.
- Not a rail: Open finance is a data and permission layer. Payments still move over rails such as ACH, RTP, FedNow, Faster Payments or SEPA Instant.
What Is Open Finance?
Open finance is a framework for sharing financial data with third-party providers you trust. It runs on secure APIs and explicit consent. Mastercard calls it an evolution of open banking that reaches pensions, insurance and investments, not only bank accounts. Stripe’s guide adds that customers choose who can access their data and for how long. They can revoke access at any time, and they never share credentials.
Here is a simple example. A sender in the US connects a bank account to a money transfer app. The app confirms who owns the account and funds the transfer, and the sender never types a routing number.
What Is Open Banking?
Open banking is the sharing and use of customer-permissioned data by banks with third-party developers and firms, so they can build applications and services. That is the definition the Basel Committee on Banking Supervision gave in its 2019 report on open banking and APIs.
In practice, open banking does two jobs:
- Account information: A provider reads balances, transaction history and account-holder details, with consent.
- Payment initiation: A provider starts a bank payment on the customer’s behalf, after the customer approves it in their own bank’s app.
Open banking is the base layer. Open finance builds on it.
Open Banking vs. Open Finance: What Is the Difference?
The difference is scope. Open banking covers bank accounts and payments. Open finance covers the wider financial footprint.
| Factor | Open banking | Open finance |
| Data covered | Balances, transactions, account details, payment initiation | Adds investments, pensions, insurance, mortgages, loans and credit products |
| Typical uses | Pay by bank, account verification, cash-flow checks | Wealth tools, insurance pricing, full financial profile for lending |
| Maturity | Established in many markets with clear rules | Earlier stage, with frameworks still forming |
| Regulation | Mandated in places such as the UK and EU | Mixed: mandated in Brazil, proposed in the EU, market-led in the US |
| Data consistency | Higher, from a narrower set of regulated providers | Lower, because many product types and providers are involved |
Stripe’s comparison draws the same lines on scope, maturity and data consistency. Mastercard also notes that open finance is the natural next step from open banking.
How Does Open Finance Work?
Open finance works in three parts: a consent flow, a secure login at the customer’s own institution, and an API that carries the data or the payment instruction.
- Request: The customer chooses to connect an account and sees what the provider wants to access.
- Authentication: The customer signs in at their own bank or institution. The provider never sees their password.
- Token: The institution issues a limited, time-bound token that the provider uses for approved requests only.
- Data or payment: The provider calls the institution’s API to read data or to start a payment.
- Control: The customer can review and revoke access at any time.
The Role of Open Finance APIs:
An open finance API is a secure connection that lets an app and a financial institution exchange information in real time. Mastercard describes these APIs as bridges between institutions and third-party providers. With standardized APIs, one integration can reach many institutions. You do not need a separate connection to each.
Consent, Security and Standards:
Stripe lists the building blocks as OAuth-based authorization, strong customer authentication, standardized data formats and encryption in transit and at rest. Regulated markets add certification and oversight on top.
The Basel Committee also warns that open banking raises risk. More shared data creates a bigger surface for cyber attacks, and assigning liability gets harder when more parties are involved. Security and consent design are not optional extras.
What Is an Open Finance Platform?
An open finance platform is the software layer that connects your app to many financial institutions and manages consent, data and payments for you. It saves you from building and maintaining hundreds of separate bank connections.
Most platforms offer some mix of these components:
- Institution connectivity: Coverage across banks, lenders and other providers in your markets.
- Consent management: Clear permission screens and a way for customers to review and revoke access.
- Data services: Account, transaction and identity data, cleaned into a consistent format.
- Payment initiation: Pay by bank over local rails.
- Security and compliance: Encryption, monitoring and support for regional rules.
Providers package these differently. Mastercard’s open finance offering, for example, includes APIs, developer tools, data aggregation with real-time notifications and embedded toolkits for payments, lending and onboarding. Plaid describes a similar mix of account linking, identity checks and payments across ACH, RTP and FedNow.
When you compare platforms, check these points:
- Coverage in the countries and banks your customers use
- The quality of the consent experience and the connection success rate
- Which payment rails it supports
- Uptime and data accuracy
- The licences it holds or relies on in each market
- How pricing scales with your volume
Open Finance Around the World in 2026
Open finance is moving at different speeds. Here is where four major regions stand as of October 2026.
United Kingdom:
The UK runs one of the most mature open banking systems. In July 2026, Open Banking Limited reported more than one billion payments and 100 billion API calls across the nine largest banks. In June 2026 alone, it recorded 2.81 billion API calls and 40.16 million payments, plus 18.81 million user connections. User connections are active consents, not unique people. Mastercard points to the UK’s Data (Use and Access) Act as a step toward wider “smart data” rights.
Brazil:
Brazil’s central bank and National Monetary Council introduced the framework in 2021. The official dashboard showed 208.79 million active consents on July 31, 2026, according to Let’s Money. Active consents count permissions, not people, because one person can grant many.
European Union:
PSD2 gave the EU its open banking base. The proposed Financial Data Access (FiDA) regulation would extend data sharing to investments, pensions and insurance. The European Commission proposed it in June 2023. Fintech reported in 2026 that talks are paused. One sticking point is whether the largest US tech platforms should be allowed to use it. The Commission has not withdrawn the proposal. PSD3 and the Payment Services Regulation have been agreed in principle but do not yet apply.
United States:
US open banking has been market-led, with banks, fintechs and data providers building connections through private agreements. The CFPB finalized its Section 1033 Personal Financial Data Rights rule in October 2024, with the first compliance date set for April 1, 2026. A federal court has since blocked enforcement while the Bureau reconsiders the rule. The CFPB sent a revised proposal to the White House for review in August 2026. Trackers still showed the rule as not in force in October. Check the CFPB’s site for the latest status before you plan around it.
Real-World Examples and Case Studies
Paysend: 125% More UK Transactions
Paysend, a money transfer service that connects users in 170 countries, had a funding problem. Customers could not top up the app from their bank accounts, which delayed verification and transfers. The company added open banking payment initiation through Plaid. According to Plaid’s case study, Paysend processed 125% more UK transactions after its early 2023 launch. Acceptance rates ran at 91% to 94% over the year, and support complaints fell. Plaid published these figures, so treat them as vendor-reported.
Taptap Send: Instant Wallet Top-Ups
Taptap Send, a remittance app, added open banking payment initiation so UK customers could top up their wallets instantly. Plaid’s customer describes the integration and the goal of a simpler experience. It reports no performance metrics, so we cite it as an example of the use case, not as proof of results.
Placid Express: Faster Bank Linking for a Remittance Firm
Placid Express, a remittance company founded in 1996, launched a digital service in 2014. Plaid’s story says customers can link US bank accounts and pay by ACH in seconds, and that account-holder checks complement the firm’s KYC process. Its CTO said the firm no longer waits about three days to connect a customer’s bank account. The story dates from 2018, so it shows the long-running logic of the model, not current results.
A Global Payments Company on Our Platform:
We have seen the automation side of this shift in our own client work. A global payments company came to us with a system that could not keep pace with its volume, manual compliance and slow processing. After it moved to our enterprise remittance system, transaction processing time fell by 40%. Automated KYC replaced a manual review team, and the company expanded to 50 new countries without adding headcount. That result came from automation across the transfer lifecycle, not from open finance itself. It shows why a better data connection pays off most when the platform behind it can act on the data fast.
Open Finance Use Cases for Remittance and Money Transfer Businesses
Instant Account Funding Through Pay by Bank:
Pay by bank lets a sender approve a transfer in their own bank’s app, and the money moves bank to bank. It avoids card networks and manual account entry. The 1% tax on cash-funded transfers may give US senders a reason to move to bank funding. Plaid’s payments product supports ACH, RTP and FedNow, so one connection can cover several rails.
Faster Identity and Account Verification:
Open finance can confirm that the sender owns the account they are linking. It replaces micro-deposits and statement uploads, and it feeds a cleaner record into your KYC checks. Placid Express used this logic more than a decade ago.
Lower Return and Fraud Risk on Bank Debits:
ACH debits can be returned, and consumers have an extended window to dispute certain unauthorized ones. Checking account ownership and available funds before you debit can help you decide when to release a transfer. It does not remove the need for your own risk rules.
What Open Finance Does Not Change?
Be clear about the limits. Open finance does not replace KYC or AML screening. It does not move money across borders, because domestic data connections do not settle an international payout. It does not guarantee coverage in every market. Cross-border payments show where the payout leg still depends on partners and corridors.
Benefits and Risks of Open Finance
Benefits:
- Consumers: Fewer forms, faster onboarding and more control over their data. Mastercard also points to wider access to credit for people with thin credit files.
- Businesses: Instant verification, lower manual effort and new product options.
- Banks and fintechs: A fuller view of customer needs, faster product launches and partnership routes.
Risks:
- Security: More shared data creates a larger attack surface, according to the Basel Committee.
- Liability: Responsibility is harder to assign when several parties are involved.
- Regulatory uncertainty: Rules are on hold in the US and unfinished in the EU.
- Data quality: Open finance data spans many providers, so formats and completeness vary.
- Trust: Customers need plain-language consent screens and visible controls.
How We Help Remittance Businesses Prepare for Open Finance
Open finance is only useful if your platform can act on the data. That is where we come in. Our remittance software gives MSBs, MTOs, banks and fintechs one platform for onboarding, compliance, routing, settlement and reporting.
- API-first integration layer: We connect your platform to banks, third-party processors and payment networks. New partners, including open finance and pay-by-bank providers, can plug in without a rebuild. Which providers and rails you can use depends on your licences, markets and partner agreements.
- Automated KYC and AML: Every transaction runs through identity checks and AML compliance screening before money moves. A faster funding step does not weaken your controls.
- Real-time transaction engine: Our engine processes multi-currency payments in real time, so a quicker funding step does not stall at the next hand-off. Our guide to how remittance software works walks through the full lifecycle.
- Modular and white-label options: You add the modules you need, such as cross-border payments, mobile wallets, bill pay and reporting, under your own brand. Our explainer on white-label banking covers that model.
- Fast deployment: Most implementations take two to six weeks, and our plans scale with transaction volume and the number of integrations.
Weighing new digital payments methods or AI in banking software? We can map each step of your transfer flow to the right integration.
How to Get Started With Open Finance?
- Pick one use case first: Account funding or account verification is usually the quickest win for a remittance firm.
- Map your markets: Check which countries have mature open banking, which rely on bilateral deals and which have none.
- Check licences and partners: Confirm what your sponsor bank, processor and open finance provider allow.
- Design the consent screen: Explain what you collect, why and for how long, in plain language.
- Keep KYC and AML in the loop: Treat linked-account data as one input to your compliance checks, not a replacement.
- Measure results: Track connection success, funding completion, return rates and support tickets before and after launch.
- Watch the rules: Follow the CFPB’s Section 1033 process, EU FiDA talks and local updates, and confirm requirements with your counsel.
Frequently Asked Questions
1. What is open finance?
Open finance is a framework that lets people and businesses share their financial data with approved third parties through secure APIs and explicit consent. It covers bank accounts and also investments, pensions, insurance and credit. The customer controls what is shared and can revoke access at any time.
2. What is the open banking definition?
Open banking is the sharing of customer-permissioned data by banks with third-party developers and firms, so they can build applications and services. The Basel Committee used this definition in its 2019 report. It typically covers account information and payment initiation.
3. What is the difference between open banking and open finance?
Open banking covers bank accounts and payments. Open finance extends the same consent-based model to investments, pensions, insurance, mortgages and other credit products. Open banking is more mature and more widely regulated, while open finance is still taking shape in most markets.
4. What is an open finance platform?
An open finance platform is software that connects your app to many financial institutions. It manages consent, retrieves data and can start payments, so you do not build each bank connection yourself. Providers differ in coverage, supported payment rails and pricing.
5. How does open finance work?
The customer approves a connection and signs in at their own institution. The institution issues a limited token, and the provider uses it to request data or start a payment through an API. The customer can review and revoke the permission at any time.
6. Is open finance safe?
Open finance uses authentication at the customer’s own bank, token-based access and encryption, so passwords are not shared. Risks remain. The Basel Committee warns of a larger attack surface and harder liability questions. Safety depends on the provider’s security and on clear consent design.
7. Is open finance regulated?
It depends on the region. Open banking is regulated in the UK and EU, and Brazil has a central bank framework for open finance. The EU’s FiDA proposal is stalled, and the US Section 1033 rule is on hold in court. Check local rules before you launch.
8. What are examples of open finance?
Common examples include pay-by-bank checkout, instant account verification, budgeting apps that combine accounts, and lending decisions based on permissioned cash-flow data. In remittance, Paysend and Taptap Send use open banking to let customers top up from their bank accounts.
9. How can money transfer businesses use open finance?
They can use it to fund transfers from linked bank accounts, verify account ownership and speed up onboarding. They still need KYC, AML screening and a payout route for the destination country. Open finance supports the funding step. It does not replace the rest of the workflow.
10. Does open finance replace ACH, RTP or FedNow?
No. Open finance is a data and permission layer. A pay-by-bank payment still moves over an underlying rail such as ACH, RTP, FedNow, Faster Payments or SEPA Instant. The open finance connection handles consent, verification and payment initiation.
11. Does Remit Anywhere offer open finance?
We provide remittance software with an API-first integration layer that connects to banks, processors and payment networks, plus built-in KYC, AML and settlement. Open finance and pay-by-bank providers can connect through that layer, depending on your markets and partners. Our FAQ covers integrations in more detail.
Ready to Put Open Finance to Work in Your Remittance Business?
Faster funding and cleaner verification only pay off when the platform behind them keeps pace. We can help you map your transfer flow, choose where open finance fits and connect it to a compliant, scalable remittance platform. Book a demo to see how it works, or start for free to explore the platform yourself. You can also reach us at +1 646-722-9500 or info@remitanywhere.com.