Open Banking vs Open Finance Comparison Tool
Compare which financial products are covered by open banking versus open finance. Select the financial products you want to check, and see exactly what each system can access.
Open Banking
Covers payment accounts and related services
Note: Open banking typically covers payment accounts and basic credit products only.
Open Finance
Covers your entire financial ecosystem
Note: Open finance expands to cover all financial products with your permission.
Your Financial Coverage
Select products to see how open banking and open finance coverage differ.
When you link your bank account to a budgeting app like Mint or YNAB, you’re using open banking. But what happens when that same app can also pull in your investment portfolio, your crypto wallet, your small business loan, or your pension account? That’s open finance-and it’s not just the next step. It’s the entire financial world opening up.
What Open Banking Actually Does
Open banking started as a regulation, not a tech trend. In the European Union, it came from PSD2, the Payment Services Directive 2, which forced banks to let customers share their transaction data with third parties-through secure APIs-if the customer said yes. The UK, Australia, and Brazil followed with similar rules. In the U.S. and Canada, there’s no law mandating it, but banks still offer APIs because customers demand them.The goal? Give you control. Instead of manually entering your account details into every app, you tap a button and grant access. You can see all your checking and savings accounts in one place. You can send money directly from your bank to a friend’s app without going through PayPal. You can get personalized loan offers based on your real spending habits, not just your credit score.
But here’s the limit: open banking only covers payment accounts. That means checking, savings, and sometimes credit cards. It doesn’t touch your brokerage account. It doesn’t pull in your life insurance policy. It doesn’t see your cryptocurrency holdings. If you want to manage those, you’re still logging in separately-unless you’re using open finance.
Open Finance Is Open Banking, But Broader
Open finance takes the same permission-based model and stretches it across the entire financial ecosystem. It’s not just about your bank. It’s about your entire financial life.Imagine an app that shows you:
- Your checking account balance
- Your Roth IRA value
- Your mortgage payment schedule
- Your monthly insurance premiums
- Your Bitcoin holdings
- Your small business line of credit
All updated in real time. All under your control. That’s open finance. It’s not a new technology-it’s an expansion of the same APIs used in open banking, just now connecting to investment firms, insurers, pension providers, crypto platforms, and even fintech lenders.
The European Commission is already working on what could be called PSD3-a next-gen law that would extend the open banking rules to cover these other areas. Israel is one of the few countries actively building a full open finance framework. In the U.S., it’s happening organically. Companies like Plaid, Yodlee, and Akoya are already connecting non-bank financial data through consent-based APIs. No law required. Just customer demand.
Why the Difference Matters
It’s easy to think open banking and open finance are the same thing. But the difference is in the scope-and the power it gives you.Open banking helps you track your spending. Open finance helps you optimize your entire financial strategy.
With open banking, you might see that you’re spending too much on coffee. With open finance, you might realize that you’re paying $200 a month in insurance premiums while sitting on $50,000 in low-yield savings. The app could then suggest moving some of that cash into a high-yield account, automatically rebalancing your portfolio, or even switching insurers based on your risk profile-all without you lifting a finger.
It’s not just convenience. It’s financial intelligence. And it’s only possible when data from every part of your financial life can talk to each other.
Regulation: Where It’s Locked In vs. Where It’s Wild West
In Europe, open banking is a legal requirement. Banks have to comply. APIs are standardized. Security is tightly controlled. Open finance is still in the planning stage, but the EU’s public consultation in early 2023 showed clear intent to expand those rules.In the U.S., there’s no federal law. Banks aren’t forced to open their data. But big players like Chase, Bank of America, and Wells Fargo still offer APIs because they know customers want them. Fintechs like Dave, SoFi, and Robinhood are building services that pull in investment and lending data-using consent, not coercion.
The result? Europe has consistency. The U.S. has innovation. But both are moving toward the same goal: giving consumers control over their financial data, no matter where it lives.
Canada and Australia are in between. They have open banking frameworks, but open finance is still emerging. Brazil is ahead in implementation but behind in breadth. The world isn’t moving in lockstep-but the direction is clear.
How It Works Behind the Scenes
You don’t need to understand APIs to use open finance-but knowing how it works helps you trust it.Here’s the simple version:
- You give permission through a secure screen-usually by logging into your bank or investment provider directly.
- The app you’re using connects to your financial institution through an encrypted API.
- Your data flows in-only what you authorized.
- The app uses that data to give you insights, automate transfers, or find better deals.
Security is built in at every step. Data is encrypted. Access is time-limited. You can revoke permission anytime. No one can touch your account without your explicit OK. That’s the core promise: permission, not power.
Companies like Akoya and Truelayer are the invisible middlemen. They’re the ones making sure your Chase account talks to your Robinhood account. They handle the messy part-different data formats, different security standards, different systems-so you don’t have to.
What’s Possible Today
You don’t have to wait for legislation to feel the impact.Right now, in the U.S., you can:
- Use a service like Empower to see your bank accounts, credit cards, 401(k), and student loans in one dashboard.
- Let SoFi automatically move money between your checking and savings based on your spending patterns.
- Connect your crypto wallet to a tax app like Koinly to track gains and losses.
- Use a small business tool like QuickBooks to pull in your business bank account and PayPal data without manual entry.
These aren’t futuristic ideas. They’re available today. And they’re growing faster than most people realize.
In 2023, over 120 million people in the U.S. used a financial app that connected to their bank. That number is expected to double by 2027. And as more people start using investment and lending apps, the demand for open finance will push even the biggest banks to open up.
Why This Is a Big Deal
This isn’t just about convenience. It’s about fairness.For decades, banks held all the data. They decided who got loans, who got better rates, and who got ignored. Now, you own your data. You can take it anywhere. You can compare offers. You can switch services without jumping through hoops.
Open finance levels the playing field. A small fintech can compete with a big bank-not by having more branches, but by having better data. A retiree can find the best annuity not by calling five agents, but by letting an app scan every option in seconds.
And it’s not just for the wealthy. Open finance helps people with thin credit files. If you don’t have a long credit history, but you have steady income from gig work, open finance can show lenders your real cash flow-not just your score.
The Road Ahead
Open banking gave us the foundation. Open finance is building the house.The next five years will see:
- More countries passing open finance laws, modeled after PSD2.
- Banks and brokers finally agreeing on common data standards.
- AI-powered tools that don’t just show your data-but predict your needs.
- Insurance companies using open finance data to offer dynamic, usage-based policies.
- Crypto and traditional finance finally speaking the same language.
Some say open banking and open finance are just different names for the same thing. But that’s like saying a bicycle and a car are the same because they both have wheels. One gets you to the corner store. The other takes you across the country.
Open banking is about your bank account. Open finance is about your entire financial life.
And if you’re not using it yet, you’re still managing your money the old way-with sticky notes, spreadsheets, and login fatigue.
The future isn’t coming. It’s already here. You just have to give permission.
Is open finance the same as open banking?
No. Open banking lets you share data from your bank accounts-like checking and savings-with third-party apps. Open finance expands that to include investments, loans, insurance, pensions, and even crypto wallets. Open banking is a subset of open finance.
Is open finance regulated in the U.S.?
Not yet by federal law. But many banks and fintechs offer open finance features voluntarily because customers demand them. The U.S. relies on market-driven adoption, while the EU and UK have formal regulations. That could change if new legislation like PSD3 is adopted.
Can I lose money using open finance?
Not from the data sharing itself. Open finance only lets apps read or move money if you explicitly allow it. But if you grant access to a fraudulent app, you could be at risk. Always use trusted services, check permissions carefully, and revoke access if something feels off.
What’s the difference between PSD2 and what’s coming for open finance?
PSD2 only covers payment accounts-checking, savings, credit cards. The proposed next step, sometimes called PSD3, would extend those rules to investments, pensions, insurance, and other financial products. It’s about turning open banking into open finance across the EU.
Do I need to be tech-savvy to use open finance?
No. You just tap a button to connect your accounts, like you would when logging in with Google or Apple. The tech works behind the scenes. You don’t need to understand APIs or encryption-just know what data you’re sharing and with whom.
Can open finance help me get a better loan?
Yes. Lenders can see your real income, spending habits, and savings patterns-not just your credit score. If you’re self-employed or have irregular income, open finance can show lenders your financial health more accurately, which could lead to better rates or approval.
What happens if my bank doesn’t support open finance?
You can still use many open finance apps-they often connect through third-party data aggregators like Plaid or Yodlee. These services act as intermediaries and can pull data even if your bank doesn’t offer direct APIs. It’s less direct, but still secure and functional.
Is my data safe with open finance?
Yes, if you use reputable services. Data is encrypted, access is permission-based, and you can revoke access anytime. Regulated providers must follow strict security standards. But never give access to apps you don’t trust-just like you wouldn’t hand out your debit card.
