Open Banking — What It Is and How It Works

What is open banking?

Open banking is a concept where banks share customer data (with their consent) with external companies — fintechs, financial apps, and other service providers — through secure application programming interfaces (APIs).

Instead of being locked within one bank, your financial data can "work" in applications of your choice.

How does it work in practice?

1. You use a financial app (e.g., Freenance)
2. The app asks for your consent to access banking data
3. You log in to your bank and confirm consent
4. The app retrieves data (balances, transactions) via API
5. Data is updated automatically

Important: the app doesn't know your bank password. Authorization happens directly with the bank, and access is limited to what you've consented to.

Open banking and PSD2

Open banking in Europe is driven by the PSD2 (Payment Services Directive 2) directive, which since 2019 requires banks to provide APIs. PSD2 introduced two new categories of licensed entities:

• AISP (Account Information Service Provider) — can read account data (balances, transaction history)
• PISP (Payment Initiation Service Provider) — can initiate payments from user's account

Benefits for users

• All accounts in one place — instead of logging into 3 banks, you see everything in one app
• Better financial tools — apps can analyze your spending and provide advice
• More competition — banks must compete with fintechs, which lowers prices
• Faster payments — direct payments from account without intermediaries

Security

Open banking is regulated and supervised. In Poland, licenses are issued by KNF (Polish Financial Supervision Authority). Companies using open banking must meet rigorous security requirements, including strong customer authentication (SCA).

How Freenance can help

Freenance uses open banking to automatically retrieve data from your bank accounts. Instead of manually entering expenses, you see a complete financial picture — updated and accurate. Safely, with your consent, in accordance with PSD2.

👉 Connect your accounts with Freenance — freenance.io